London shares fall as Chinese stimulus boost fades By Reuters

(Reuters) – British shares fell on Wednesday, paring gains from the previous session, as investors questioned whether optimism over China’s expanded stimulus measures was overblown.

At 0715 GMT, the blue chip was down 0.3 percent.

It rose 0.3 percent in the previous session, amid a global rally after China launched its biggest round of stimulus measures since the COVID-19 pandemic.

However, optimism faded as market watchers questioned whether the scope of the proposed measures was broad enough to address deep-seated problems in China and spark a sustained revival in consumer and industrial demand.

Even China’s central bank, which cut its medium-term lending rate on Wednesday, did little to lift sentiment again.

“Monetary policy remains unlikely to move the needle on Chinese growth … the Chinese economy needs fiscal stimulus and monetary policy alone is not enough to revive domestic demand,” analysts at BCA Research said in a note note.

The pullback in UK stocks was broad, with a nearly 1% drop in the drinks sector leading decliners.

The banking and life insurance sectors lost about 0.8% each.

An index of oil and gas stocks fell 0.3 percent as crude prices fell.

However, industrial miners and precious metals miners took advantage of the previous session’s gains, rising 1% and 0.7% respectively, as prices and gold continued to rise.

The more domestically focused mid-cap index was flat, with financials keeping a lid on gains.

Among other one-offs, property portal Rightmove ( OTC: ) lost 0.5% after rejecting a sweetened $8.1 billion takeover offer from Australia’s REA Group, saying the increased offer was still “unattractive” .

Retailer DFS Furniture also fell 0.5% after posting a 65.7% fall in annual profit.