- Dechra Pharmaceuticals slides on discounted placing
- Frasers surges on upbeat earnings forecast
- FTSE 100 down 0.6%, FTSE 250 adds 0.2%
July 21 (Reuters) - UK's FTSE 100 dipped on Thursday as a deepening political crisis in Italy and an imminent European Central Bank policy decision weighed on investor mood across Europe, while positive corporate earnings reports supported the mid-cap index.
The blue-chip FTSE 100 fell 0.6%, largely in-line with losses in the broader European equities benchmark.
Worries over an energy supply crunch in Europe eased as gas began flowing again along the biggest pipeline from Russia to Germany, though an expected interest rate hike in Europe and Italian Prime Minister Mario Draghi's resignation weighed.
Despite a severe cost-of-living crisis in the UK, the FTSE 100 has outperformed its global peers this year due to its heavy exposure to commodities and defensive sectors.
However, growing worries about a global recession have led to doubts if the index can continue to shine in the second half of the year.
"Peaking inflation dynamics and rising global recession risks will likely lead to a rotation back into quality and, to some extent, growth names," said Mathieu Racheter, head of equity strategy research at Julius Baer.
"We, therefore, see more downside risks to UK equities compared to their U.S. and European peers from current levels in case a recession materialises."
Meanwhile, former finance minister Rishi Sunak and foreign secretary Liz Truss will battle it out to become Britain's next prime minister after they won the final lawmaker vote. The result will be announced on Sept. 5.
Among single stocks, veterinary drugs producer Dechra Pharmaceuticals slid 5.1% to the bottom of the FTSE 100 after discounted placing, while Carnival Corp fell 8.8% on stock offering plans.
The domestically focussed mid-cap index gained 0.2%, with Frasers Group jumping 24.1% to the top of the index after Mike Ashley's sportswear and fashion group said it expected higher profit next year.
Online trading platform IG Group climbed 5.1% after reporting a slightly higher-than-expected annual profit.
However, pub operators Mitchells & Butlers and Fuller, Smith & Turner dropped 5.6% and 1.6%, respectively, after they warned on costs as the sector scrambles to protect margins and attract customers.
Reporting by Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu
Source: Reuters