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British midcaps slide over 2% as data shows shrinking economy

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FILE PHOTO: A man shelters under an umbrella as he walks past the London Stock Exchange
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By Devik Jain and Lisa Pauline Mattackal

(Reuters) - London's FTSE 250 index fell to its lowest level in three months on Monday after data showed Britain's economy unexpectedly shrank in April ahead of a Bank of England policy meeting this week.

The domestically-focussed mid-cap index was off 2.6% and the blue-chip FTSE 100 index was down 1.5%. Both indexes recorded a fifth straight session of losses.

Britain's gross domestic product (GDP) contracted by 0.3% in April from March, while over the three months to April GDP was up by 0.2%, slowing sharply from growth of 0.8% in the three months to March, official data showed.

"The accumulating evidence that the UK economy is contracting should detract the Monetary Policy Committee from more aggressive moves," Gilles Moëc, AXA Group Chief Economist told the Reuters Global Markets Forum, adding that he expects a 25 bps hike this week.

The Bank of England (BoE) is expected to raise interest rates on Thursday by 25 basis points (bps) to 1.25%. If it opts for a bigger hike, it could stoke recession fears.

Separately, industrial and manufacturing output also logged a surprise monthly fall against a backdrop of inflation nearing 10%.

Among individual stock moves, oil majors BP Plc and Shell Plc fell more than 2%, while industrial miners shed 3.2%, as commodity prices slid on concerns around demand due to a rise in China's COVID-19 cases. [O/R][MET/L]

Mexico-focussed precious metals miner Fresnillo jumped 5.6%, topping the gainers on the FTSE 100 index.

Ferrexpo Plc, meanwhile, dropped 6.6% after the Ukraine-focused miner cut its iron ore production in the wake of Russia's invasion of its neighbour.

(Reporting by Devik Jain and Amal S; Additional reporting by Lisa Pauline Mattackal in Bengaluru; Editing by Amy Caren Daniel)

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