UK's midcap index marks longest losing streak since 2020

By Bansari Mayur Kamdar and Johann M Cherian

(Reuters) - UK's midcap index on Thursday marked its longest losing streak since the height of pandemic-induced selloff in 2020 as a weak sterling and spiralling inflation fed into fears of a deep recession in Britain.

The FTSE 250 index, more exposed to the domestic economy, shed 3% to hit its lowest since mid-July. The index closed down for a ninth consecutive session.

As inflation soars into double digits, investors are worried about the British economy's outlook, with a surge in energy prices in winter expected to squeeze consumer spending power further. Sterling skidded to its lowest level since March 2020. [GBP/]

Liz Truss, the frontrunner to replace Boris Johnson as Britain's prime minister, said she would act immediately to help people cope with surging energy prices that threaten to leave many unable to heat their homes this winter.

Truss, currently foreign secretary, is in a close contest with Rishi Sunak, a former finance minister, to become the next leader set to be announced on Monday.

"Whichever lucky person claims the mantle of UK PM next week faces a host of challenges, with a rerun of the Winter of Discontent seemingly inevitable," said Chris Beauchamp, chief market analyst at online trading platform IG. "Even without a major clash with the EU still likely, the UK's outlook is worsening by the day."

The exporter-heavy FTSE 100 closed down 1.9%, also hitting mid-July lows, as the economic slowdown fears gripped global equity markets.

Still, the midcap index has far underperformed its blue-chip peer this year, with the FTSE 250 down 21.2% so far in 2022 and the FTSE 100 slipping just 3.2%.

Global miners such as Glencore and Rio Tinto dropped 6.6% and 3.4%, respectively, as metal prices slumped on worries about weak demand. [MET/L]

Reckitt Benckiser fell 5.2% after the consumer goods maker announced the departure of its CEO Laxman Narasimhan.

(Additional reporting by Aniruddha Ghosh and Sruthi Shankar in Bengaluru; Editing by Krishna Chandra Eluri and Shailesh Kuber)