The FTSE 100 has been dragged down by pharmaceuticals suffering a blow, while Wall Street revelled in another day of sinking inflation readings.
Shares in pharma giant GSK fell as much as 12% during the day, its biggest drop since 1998, and its consumer spin-off brand Haleon by as much as 13% on Thursday, helping to push the FTSE into the red.
The share price slump comes amid reports that Haleon is facing US lawsuits surrounding the safety of heartburn drug Zantac.
While another day of bleak energy news in the UK set the expected price cap £200 higher than forecasts from earlier this week, with bills topping £5,000 next year.
The London index finished the day 41.2 points lower, or 0.55%, at 7465.91.
In the US, producer prices eased up in July, following Wednesday’s lower-than-expected inflation reading and further signalling a drop in energy prices.
The S&P 500 index was up by 0.48% when European markets closed, while Dow Jones had lifted 0.6%.
“A swathe of ex-dividends on the FTSE 100 has meant that the index has been left behind as Wall Street moves higher once again,” Chris Beauchamp, chief market analyst at online trading platform IG, said.
“After so long spent discussing surging prices, investors have been treated to two weaker inflation gauges in two days.
“A drop in factory-gate prices, which might be viewed as a bit of a leading indicator for CPI, helped to solidify the view that CPI has finished rising for now, taking the pressure off the Fed and others to keep hiking rates so quickly.
“Stock markets have recovered their forward momentum, and expectations of a fresh turn lower are now weakening by the day.”
Markets were mixed elsewhere in Europe, with the French Cac 40 lifting 0.33% while the German Dax dropped by 0.05%.
The pound was down 0.02% against the dollar at 1.222, and up 0.07% against the euro at 1.183.
In company news, shares in Ladbrokes and Coral owner Entain rose after it posted a 17% jump in its half-year earnings, with better-than-expected trading in its betting shops.
But bosses cautioned that the increasing rates of inflation and energy costs are a cause for concern for consumers and the group is “not immune” to economic pressures.
Entain’s share price lifted 49p to 1,357.5p at markets closing.
Meanwhile, shares slumped by more than 12% in international real estate company Savills after it said UK residential sales dipped in the first half of the year.
But it raked in more than £1 billion in revenue with real estate investment holding strong against the weak economic backdrop.
Shares in Savills were down by 97p to 1,027p at the end of trading.
A surge in demand for air conditioning during the summer heatwave bumped up sales for electrical retailer Marks Electrical Group, and sent shares upwards.
The company said its revenue grew more than 13% in its trading update on Thursday.
Shares were up by 4p to 72p when markets closed.
The biggest risers on the FTSE 100 were Entain, up 49p to 1,357.5p, Coca-Cola HBC, up 66p to 2,047p, AVEVA Group, up 77p to 2,452p, Flutter Entertainment, up 226p to 9,382p, and M&G, up 4.5p to 222.2p.
The biggest fallers on the FTSE 100 were GSK, down 156.6p to 1,400p, Haleon, down 13.7p to 265.8p, Airtel Africa, down 8p to 145.9p, Rio Tinto, down 187p to 4,816p, and AstraZeneca, down 312p to 10,506p.
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