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Global investors downbeat while pound nears two-year high against euro

Global stock indices lagged on Wednesday and the pound hit new highs against the euro (Tim Goode/PA)
Global stock indices lagged on Wednesday and the pound hit new highs against the euro (Tim Goode/PA)

Global stock indices lagged on Wednesday and the pound hit new highs against the euro amid lingering concerns among investors that UK interest rates will stay higher for longer.

The FTSE 100 was down 71.11 points, or 0.86%, to close at 8,183.07.

Anglo American was among the biggest fallers of the day after it repeatedly rejected calls for a takeover by rival mining group BHP.

Late on Wednesday afternoon, BHP confirmed it was not going to table a bid after failing to reach an agreement, putting the brakes on a potential global mega-deal.

Meanwhile, global investors appeared to be downbeat amid further evidence from the US that consumers are proving to be resilient in the face of higher prices and borrowing costs.

It comes ahead of all-important inflation data being released across the pond on Friday.

“Global equities shuddered at the prospect of interest rates staying higher for longer,” Dan Coatsworth, investment analyst for AJ Bell, said.

“Despite plenty of earlier signals that central banks were in no rush to cut rates until inflation had fallen further, investors are only now coming to terms with the idea that monetary policy will stay tight for just a bit longer.

“Investor unease means that Friday’s US inflation data has the potential to move the market in a big way.”

Elsewhere in Europe, Germany’s Dax fell 1.09% and France’s Cac 40 closed 1.52% lower.

Over in the US, the S&P 500 was down about 0.7% and the Dow Jones down 0.1% by the time European markets closed.

Earlier in the day, the pound rose to a 21-month high against the euro, trading at about 1.1785 euros. When European markets closed, sterling was more or less flat against the euro at 1.176, and down about 0.4% to 1.271 US dollars.

The price of Brent crude oil was down about 0.75% to 83.60 US dollars barrel.

In other company news, shares in Royal Mail owner International Distribution Services (IDS) climbed higher after it accepted a £3.6 billion takeover over from EP Group.

The company, which is owned by Czech businessman Daniel Kretinsky, said it has the “utmost respect for Royal Mail’s history and tradition”. Shareholders are set to vote on the deal in September. Its share price closed 4.3% higher.

In other takeover news, Bloomsbury Publishing said it was buying US academic publishing group Rowman & Littlefield in a deal worth up to 83 million US dollars (£65 million).

Chief executive Nigel Newton described it as a “game-changer” for Bloomsbury, with the acquisition the biggest in its history. Its share price jumped by 7.2% at close.

The biggest risers on the FTSE 100 were Fresnillo, up 12p to 626p, Beazley, up 8.5p to 670p, Next, up 102p to 9,310p, AB Foods, up 26p to 2,667p, and United Utilities, up 9p to 990.8p.

The biggest fallers on the FTSE 100 were National Grid, down 38.7p to 150.45p, Ocado, down 50.3p to 360.1p, RS Group, down 34p to 719.5p, National Grid, down 38.2p to 838.4p, and Anglo American, down 78p to 2,480p.