Turkey’s financial jitters continue to weigh on UK stocks

It came as trade threats were exchanged between Washington and Ankara.

Recep Tayyip Erdogan has told Turks to boycott US electronic goods (Andrew Parsons/PA)
Recep Tayyip Erdogan has told Turks to boycott US electronic goods (Andrew Parsons/PA)

The FTSE 100 spent another session in the red as jitters over Turkey’s financial crisis continued to dampen appetite for European stocks.

London’s blue chip index ended the day down 0.4% or 30.81 points at 7611.64.

The French CAC 40 was also in the red, down 0.16%, while the German DAX was flat.

Investors have been slow to re-embrace European stocks amid concerns of a contagion effect from Turkey’s currency crisis, triggered by worries over President Recep Tayyip Erdogan’s economic policies and a trade and diplomatic dispute with the United States.

The two countries are at loggerheads over Turkey’s detention of American evangelical pastor Andrew Brunson, with Donald Trump exacerbating the feud by doubling steel and aluminium tariffs on the country.

Mr Erdogan has responded by telling Turks to boycott US electronic goods.

David Madden, a market analyst at CMC Markets UK, said: “The uncertainty surrounding Turkey is still hanging over equity markets.

“Tensions between Turkey and the US have risen in light of President Erdogan’s declaration that the country will boycott US electrical goods.

Turkey’s currency woes have been exacerbated by trade threats from Washington (Niall Carson/PA)

“Firms like Apple won’t be too worried about this announcement, but it sends out the message that sour relations are here to stay.

“Given the potential exposure that eurozone banks have to the country, investors will remain cautious.”

Sterling was mixed, trading lower by around 0.3% against the US dollar at 1.272 but rising 0.2% versus the euro to trade at 1.121.

Investors were digesting UK data which showed unemployment reached a 40-year low.

The Office for National Statistics said unemployment fell by 65,000 in the latest quarter to 1.36 million, the lowest figure since 1976, while the jobless rate came in at 4%.

Brent crude prices were up 0.4% at 73.08 US dollars per barrel as markets reacted to reports that Saudi Arabia had cut its oil production.

It added to concerns about restricted supply, with US sanctions on Iran also threatening to hit crude exports.

In UK stocks, Antofagasta was the worst performing stock after reporting a 16% drop in half-year earnings, having been stung by higher costs and lower production output.

Costs were up due to a stronger Chilean peso, while copper production fell 8.5% and gold production dropped 36%.

Shares in the miners were down 66.4p at 886.4p.

Royal Mail shares fell 7.4p to 454.9p after communications regulator Ofcom fined the postal service £50 million for a “serious breach” of competition law.

Ofcom said the company abused its dominant position by discriminating against its only major competitor for delivering letters, Whistl.

Esure jumped 10.4p to 277.6p, having agreed to a £1.2 billion takeover by private equity outfit Bain Capital.

Esure will recommend Bain’s formal 280p a share offer to investors, which represents a 37% premium to last week’s share price.

Debenhams shares jumped 0.5p to 13.26p amid rumours that retail boss Mike Ashley might swoop on Debenhams and combine it with House of Fraser, which he recently bought out of administration for £90 million.

The biggest risers on the FTSE 100 were United Utilities up 11.8p at 751.4p, Severn Trent up 24.5p at 1,994.5p, Ferguson up 68p at 6,241p, and Pearson up 10p at 926.6p.

The biggest fallers on the FTSE 100 were Antofagasta down 66.4p at 886.4p, TUI down 45p at 1,481.5p, Anglo American down 36.2p at 1,644.2p, and St James’ Place down 22.5p at 1,134p.

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