By Julien Ponthus
LONDON (Reuters) - UK shares closed at their lowest since April as a global sell-off on equity markets caused by fears of fast-rising rates showed no sign of ending on Thursday despite data showing slower than expected U.S. inflation.
The FTSE 100 <.FTSE> ended the day down 1.9 percent, a fall broadly in line with European benchmarks, all retreating as the S&P 500 <.SPX> and the Nasdaq <.NDX> were set for a second session of heavy losses after their Wednesday plunge.
"The bloodbath for global equities comes as investors adjust to a world of higher U.S. interest rates", said Jasper Lawler from London Capital Group, explaining that investors were switching bets on so-called growth stocks, like America's Facebook <FB.O> or Amazon <AMZN.O> to "more conservative strategies".
A smaller-than-expected rise in consumer prices in the United States seemed to weaken the case for an aggressive campaign of interest rate rises but did little to reassure investors on either side of the Atlantic.
Adverse corporate news meant that British firms were among the biggest losers across Europe.
Books, newspaper and stationery retailer WH Smith <SMWH.L> posted the worst performance of the pan-European STOXX 600 <.STOXX> index, slumping 11.5 percent. It unveiled plans to restructure its high street business to face lower consumer spending and lingering economic uncertainties.
Recruiting firm Hays <HAYS.L> was second, sinking 11 percent, after reporting a slower quarterly fee growth rate, hurt by a relatively stronger pound against other foreign currencies.
British fund supermarket Hargreaves Lansdown <HRGV.L> was also among the big losers of the day, retreating 5 percent after a trading update which suggested a slower start to the financial year.
Among small market capitalizations, shares in fund manager Jupiter <JUP.L> hit 27-month lows after it reported much larger than expected outflows in the third quarter, feeding a slide in asset management stocks that outstripped the wider market sell-off.
Oil majors also contributed to drag the index down as oil fell to two-week lows with prices also hit by the storm on Wall Street and an industry report showing U.S. crude inventories rose more than expected. BP <BP.L> lost 2.6 percent and Royal Dutch Shell <RDSa.L> 3 percent.
Overall losses on British benchmarks were also exacerbated by the fact that a number of stocks, such as Barratt Develoment <BDEV.L>, Centrica <CNA.L>, HSBC <HSBA.L> and Tesco <TSCO.L>, were trading without entitlement to their latest dividend pay-out.
A surge in gold prices triggered by risk-wary investors searching for safe havens lifted miners Fresnillo <FRES.L> and RandGold <RRS.L> up 9 percent and 8.7 percent respectively.
(Julien Ponthus, Editing by William Maclean and Hugh Lawson)