- Sainsbury's edges up
- Oil stocks head lower
- British gas prices surge
- FTSE 100 down 1.1%, FTSE 250 off 0.7%
July 5 (Reuters) - UK's blue-chip FTSE 100 shed opening gains on Tuesday on losses in energy and bank shares due to recession worries, while supermarket group Sainsbury's climbed as quarterly sales matched market expectations.
The FTSE 100 fell 1.1% and the domestically oriented FTSE 250 index slid 0.7%.
European markets also reversed course to edge lower, with oil major Shell, lender HSBC and miner Glencore falling nearly 2% each.
While crude prices fell on recession worries, British gas prices strengthened on concerns about pipeline supplies from Norway after offshore workers there began a strike demanding wage hikes.
"A strike in Norway threatens near-term supplies, (even though) the demand outlook remains uncertain," Ian Williams, analyst at Peel Hunt said in a note.
Among the few bright spots, Sainsbury's rose 1.4% after reporting a 4% fall in underlying sales in its first quarter, which was largely anticipated by investors after a warning from Tesco and Morrisons last month.
"It doesn't come as much of a surprise that management are warning of a consumer that's watching every penny as the cost-of-living crisis takes its toll," said Matt Britzman, equity analyst at Hargreaves Lansdown.
"It's positive then to see guidance remain intact, though i's worth remembering it's been raised and lowered already this year."
Banks stocks will be in focus when the Bank of England (BoE) publishes its Financial Stability Report at 0930 GMT. The central bank can impose controls on how much lenders can pay to shareholders based on the economic outlook.
Several BoE policymakers including Silvana Tenreyro and Catherine Mann as well as chief economist Huw Pill will speak later this week.
Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur