London stocks slide on fears of second virus wave

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London-listed stocks snapped two straight sessions of gains on Tuesday as fears of another wave of the COVID-19 pandemic overshadowed signs of a tentative economic recovery in May, while safety equipment maker Halma slumped on a bleak forecast.

Halma’s shares (HLMA.L) slid 5.9% after the company said it expected both profit and revenue to fall in its fiscal year 2021 and flagged potential job cuts.

Tech-heavy investment trust Scottish Mortgage (SMT.L) fell 5.5%, tracking a sell-off in U.S. and European technology stocks on new coronavirus restrictions in California and simmering U.S.-China tensions.

The export-laden FTSE 100 .FTSE was down 0.6%, with financials, health care and consumer staples stocks among the biggest drags, but a weaker pound helped it outperform European peers.

The mid-cap FTSE 250 .FTMC shed 1.2%, as authorities said a second wave of COVID-19 in the coming winter could kill up to 120,000 Britons over nine months in a worst-case scenario.

“With the UK being in the early stages of re-opening up the economy, there is a fear among investors that if a threshold is exceeded, coronavirus cases might spike,” said David Madden, analyst at CMC Markets.

UK equities have rallied from a coronavirus-driven crash in March on aggressive global stimulus and signs of a revival in business activity following the easing of nationwide restrictions.

Data on Tuesday showed UK gross domestic product rose 1.8% in May after slumping by a record 20.3% in April. But consumer spending remains far below normal levels and economists are cautious about the longevity of any recovery.

Citigroup analyst Robert Buckland said he expected UK stocks to remain around current levels in the next year as “the shutdowns have reversed nearly two decades of growth (and) a recovery is unlikely to be quick and simple.”

Online supermarket and technology group Ocado (OCDO.L) slipped 2.5% despite reporting a 27.2% jump in first-half retail sales.

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