FTSE 100 closes winning week on the back foot
'The UK economy being stuck in the mud and the threat of high tariffs on Canada won't be a shock to markets, but they are hard to ignore,' said Dan Coatsworth, investment analyst at AJ Bell.
'After a strong start to the week, investors ran out of energy on Friday,' he added.
The FTSE 100 index closed down 34.54 points, 0.4%, at 8,941.12. The FTSE 250 ended down 81.45 points, 0.4%, at 21,613.25, but the AIM All-Share rose 0.42 of a point, 0.1%, at 773.55.
For the week, the FTSE 100 rose 1.3%, the FTSE 250 climbed 0.3% and the AIM All-Share was down 0.1%.
Figures showed the UK economy shrank again in May, confounding expectations for a modest rise.
According to the Office for National Statistics, UK gross domestic product fell 0.1% on-month in May. It followed a 0.3% fall in April from March.
The economy had been expected to grow 0.1% in May, however, according to consensus cited by FXStreet.
More positively, growth in March was revised up to 0.4%, from 0.2% before leaving GDP up 0.5% in the three months to May.
Peel Hunt's Kallum Pickering said the 'material slowdown' in the second quarter did not come as a major surprise.
'First quarter activity was lifted by exporters increasing production ahead of anticipated US tariffs, as well as domestic homebuyers accelerating purchases ahead of the stamp duty rise on 1 April.
'Second quarter activity, meanwhile, is depressed by rising employment taxes and higher minimum wages, as well as increases in regulated prices for energy and water,' Mr Pickering said.
But the softer-than-expected May suggests some downside risk to Mr Pickering's forecast that real GDP will expand by 0.2% quarter-on-quarter in the second quarter, he said.
Goldman Sachs left its second quarter GDP forecast at 0.1% quarter-on-quarter but nudged its forecast for 2025 as a whole upwards to 1.2% from 1.1%, given the upward revision to March's figure.
The data put sterling under pressure. The pound was quoted at 1.3503 dollars at the time of the London equities close on Friday, lower compared with 1.3561 dollars on Thursday. The euro traded higher at 1.1699 dollars, against 1.1679 dollars.
Against the yen, the dollar was trading higher at 147.34 yen compared with 146.49 yen.
In European equities on Friday, the CAC 40 in Paris closed down 1.0%, while the DAX 40 in Frankfurt ended 0.8% lower.
Stocks in New York were lower at the time of the London close on Friday. The Dow Jones Industrial Average was down 0.7%, the S&P 500 index was 0.4% lower, and the Nasdaq Composite gave back 0.2%.
Tariff nerves resurfaced as US President Donald Trump said the US will impose a 35% tariff on Canada at the start of August.
The US president sent a letter to Canada late on Thursday, following an interview in which Mr Trump warned EU nations to expect a tariff announcement targeting the bloc 'today or tomorrow'.
He said countries that had not received a letter from him would face tariffs of 15% to 20%.
'We're just going to say all of the remaining countries are going to pay, whether it's 20% or 15%. We'll work that out now,' Mr Trump told NBC News. Mr Trump's 'reciprocal' tariffs are currently set at 10%.
The yield on the US 10-year Treasury was quoted at 4.41%, widening from 4.37%. The yield on the US 30-year Treasury was quoted at 4.93%, stretched from 4.88%.
On the FTSE 100, BP advanced 3.3%. It guided a pick-up in upstream output in the second quarter, but also expects results to be hit by weaker commodity prices and impairments.
The London-based oil major said it now expects upstream production for the second quarter that ended on June 30 to be higher against the first quarter, an improvement on its prior estimate for production to be broadly flat.
In the gas and low carbon energy offering, realisations are expected to contribute a 100 million dollar to 300 million dollar hit, when compared with the first quarter, however.
In oil production and operations, a chunkier hit in the range of 600 million dollars to 800 million dollars has been earmarked. The company noted 'production mix effects and the price lags on BP's production in the Gulf of America and the UAE'.
'There was a significantly higher level of turnaround activity' in its products segment, the company noted. 'The oil trading result is expected to be strong.'
'Finally some encouraging news from BP, with a 2Q25 outlook statement that should reverse the swath of negative revisions that consensus has made in recent weeks,' commented Citi analyst Alastair Syme.
Further support came as Brent oil rose to 70.38 dollars a barrel at the time of the London equities close on Friday, from 68.89 dollars late on Thursday.
A jump in the gold price boosted miners Fresnillo and Endeavour Mining, up 2.9% and 2.8% respectively, while on the FTSE 250, Hochchild Mining advanced 5.8%.
Gold was quoted higher at 3,364.33 dollars an ounce against 3,320.06 dollars.
Heading south, SSP fell 8.1% after UBS downgraded to 'sell' from 'neutral'.
UBS believes weak volumes and lower near-term capacity put consensus forecasts at London-based operator of food and beverage outlets in travel locations at risk.
The biggest risers on the FTSE 100 were Fresnillo, up 51 pence, at 1,516.0p, BP, up 13.3p, at 402.0p, Endeavour Mining, up 60.0p at 2,280.0p, British American Tobacco, up 81.0p at 3,788.0p and Aviva, up 10.6p at 627.0p.
The biggest fallers on the FTSE 100 were JD Sports, down 2.96p at 87.6p, GSK, down 46.0p at 1,408.5p, WPP, down 12.6p at 420.8p, Smith & Nephew, down 33.0p at 1,122.5p and Croda International, down 82.0p at 2,978.0p.
There are no significant economic events on Monday. The week picks up with US inflation figures on Tuesday and UK inflation and labour market data on Wednesday and Thursday.
Monday's UK corporate calendar sees a trading update from investment manager, Ashmore Group.
Contributed by Alliance News
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