December 17, 2019 / 8:33 AM / a month ago

UK shares fall on hard Brexit fears; NMC Health tanks on short attack

(Reuters) - British firms more exposed to the domestic economy took a hit on Tuesday after Prime Minister Boris Johnson’s hard line in talks with the European Union rekindled fears of a hard Brexit, while NMC Health plunged on Muddy Waters’ short attack.

FILE PHOTO: A trader works as screens show market data at CMC markets in London, Britain, December 11, 2018. REUTERS/Simon Dawson

Johnson will use his control of parliament to outlaw any extension of the Brexit transition period beyond 2020 - his boldest move since winning a large majority in last Thursday’s election, and one that spooked financial markets.

That pushed the midcap FTSE 250 .FTMC down more than 1% on its worst day in more than two months. The index had touched successive all-time highs in the last two sessions after Johnson's election victory.

However, London's main index FTSE 100 .FTSE eked out a 0.1% gain, lifted by trade-sensitive stocks amid optimism around a proper agreement between China and the United States.

Oil majors BP (BP.L) and Shell (RDSa.L) along with HSBC (HSBA.L) were the biggest boost.

Weighing on the index was Unilever’s (ULVR.L) 7% drop, its steepest one-day decline in more than a decade, after cutting its 2019 sales growth view.

NMC Health Plc (NMC.L) also capped gains after losing nearly one-third of its value.

Finablr (FINF.L), which was founded and co-chaired by Bavaguthu Raghuram Shetty - also the founder and co-chairman of NMC Healthcare, dropped 10.8%, with traders citing a read-across from NMC.

JPMorgan’s basket of London-listed companies .JPDEUKDM that make their cash in domestic markets dropped 2.2%, having soared more than 9% since Friday over the election euphoria.

An index of housebuilders .FTNMX3720 shed 2.4%.

“The reality check of the possibility of a no-deal Brexit, while still over a year away, has tempered some of the enthusiasm from last Thursday’s election result,” CMC Markets analyst Michael Hewson said.

The steepest faller among midcaps was Senior Plc (SNR.L), which makes parts for Boeing Co’s (BA.N) 737 MAX jets, tumbling 11% on its worst day in over three years after the U.S. planemaker’s decision to suspend production of the MAX jets.

Shares of other Boeing (BA.N) suppliers as well as those of airlines also slipped, with British Airways owner IAG (ICAG.L) and engine maker Rolls-Royce (RR.L) shedding more that 2% each.

Meanwhile, blue-chip banks Lloyds (LLOY.L) and RBS (RBS.L) tumbled 5.9% and 3% respectively after failing to impress in the 2019 stress test, while new capital rules are expected to hit their investor payout plans.

Petrofac (PFC.L) fell 6.6% after the oilfield services provider forecast lower annual revenue.

Reporting by Shashwat Awasthi and Muvija M in Bengaluru; Editing by Saumyadeb Chakrabarty and Uttaresh.V; Editing by Mark Heinrich

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