FTSE 100 closes lower as commodity-linked stocks weigh

The FTSE 100 fell 0.2%, following two weekly gains that lifted the index to its highest levels in more than two months and the FTSE 250 midcaps index dropped 1.3%

UK's FTSE 100 closed lower on Monday, with commodity-linked stocks weighing heavy on the index, as global markets watched the rare protests in China against strict COVID-19 restrictions, leaving its economic outlook uncertain.

The blue-chip FTSE 100 fell 0.2%, following two weekly gains that lifted the index to its highest levels in more than two months. The more domestically focused FTSE 250 midcaps index dropped 1.3%.

Energy stocks were the biggest drags on the FTSE 100, with oil majors BP and Shell down 1% and 0.3%, respectively. Banks and Insurers were the second biggest sectoral losers.

Commodity prices dipped on worries about demand from top consumer China where protests against COVID restrictions flared up. China's zero-COVID policy has already slowed the economy and pressured global growth, but failed to stem the rise in infections.

It's a very hard thing to price, even the markets are not used to seeing demonstrations in China, said Chris Beauchamp, chief market analyst at IG Group.

It looks quite serious, worries about how that will affect the government's reopening strategy and what kind of response you will get from Beijing, that's definitely causing a bit of caution, he said.

Real estate stocks lost more than 1%. A survey showed British property market activity stalled in October and house price growth slowed to its lowest quarterly level since February 2020 due to a disastrous "mini-budget" and a cost-of-living crisis.

Consumer sensitive stocks have had a tremendous run from their lows in October amid hopes for the central bank's slow down on interest rates, said Russ Mould, investment director at AJ Bell.

But the ongoing difficulties that consumers face may be that they are pausing a little bit for breath as well, he said.

British retailers fell 1%. With the worsening cost-of-living crisis, focus will now be on Cyber Monday sales after data showed Black Friday shopper numbers across Britain rose 3.7% year-on-year, albeit still down 21.3% on pre-pandemic levels.