UK shares backtrack as Ukraine optimism fizzles

UK shares shed their early gains on Monday, with tensions in Ukraine keeping global markets on edge despite attempts to defuse the crisis.

The FTSE 100 index fell 0.9% by mid-day trading, while the domestically focused mid-cap index declined 1.6% and hit an 11-month low.

The office of French President Emmanuel Macron said on Monday U.S. President Joe Biden and Russian President Vladimir Putin had agreed in principle to a summit over Ukraine.

The White House said it had agreed to a meeting only “if an invasion hasn’t happened”, while the Kremlin said there were no concrete plans yet for a summit.

“European markets have continued to be susceptible to headline risk today and are likely to remain so for some time to come,” said Michael Hewson, chief market analyst at CMC Markets UK.

“Today’s price action is a perfect example of how a single headline can turn sentiment on its head.”

Russia-exposed miners Polymetal International PLC and EVRAZ plc fell 8.0% and 5.4%, respectively, on the possibility of any sanctions imposed in the event of a Russian invasion.

Escalating tensions between Moscow and Western countries over Ukraine and the possibility of sanctions against Russia have fuelled fears that supplies of key commodities produced and exported by Russian companies could suffer.

Meanwhile, British Prime Minister Boris Johnson is expected to set out plans to scrap coronavirus restrictions.

Activity in Britain’s private sector picked up at the fastest pace since June 2021 this month, as spending on travel, leisure and entertainment rose after an Omicron wave of cases eased, a survey showed.

Among individual stocks, heavyweight drugmaker AstraZeneca (NASDAQ:AZN) climbed 2.7% after saying its cancer drug helped patients with a type of advanced breast cancer live longer.

In the United States, markets are closed on Monday for Presidents Day.