The FTSE 100 closed lower on Monday in lacklustre trading, amid a downbeat view of the UK’s economic prospects for 2026.
The index closed down 31.45 points, 0.3%, at 9,865.97. The FTSE 250 ended up 30.01 points, 0.1%, at 22,342.21, and the AIM All-Share closed up 3.09 points, 0.4%, at 760.48.
The Confederation of British Industry (CBI) said firms across the private sector once again expect activity to fall in the next three months, extending a run of negative predictions that began in late 2024.
Scope Markets analyst Joshua Mahony commented: “European markets have entered the final full week of 2025 on a largely tepid tone with many easing back ahead of a shortened week that looks likely to see lower volume and lower volatility.”
The CBI’s Alpesh Paleja said: “Our latest surveys round off a disappointing year for private sector growth. They mark a continuation of the headwinds that have plagued businesses over the past 12 months: tepid demand conditions, with households cautious around spending; and strong cost pressures squeezing margins.
“Uncertainty ahead of November’s budget also put the brakes on key spending decisions and big projects, choking up pipelines of work. The latest growth Indicator suggests that the alleviation of this uncertainty hasn’t materially boosted activity.”
The CBI’s report came as data showed the UK economy suffered a growth slowdown in the third quarter of 2025.
According to the Office for National Statistics (ONS), UK gross domestic product (GDP) nudged 0.1% higher quarter-on-quarter in the three months to September 30. GDP had risen 0.2% in the second quarter, downwardly revised from a previously-reported 0.3% advance.
“In output terms, growth in the latest quarter was driven by increases of 0.2% in services and 0.2% in construction; the production sector fell by 0.3%,” the ONS said.
AJ Bell analyst Danni Hewson commented: “With the Bank of England expecting growth to come to a standstill in the last few months of the year, thanks in part to the impact of the budget on overall confidence, it’s clear there are huge challenges to overcome if the UK’s growth story is going to become more compelling.”
In European equities on Monday, the CAC 40 in Paris closed down 0.4%, while the DAX 40 ended slightly lower.
The pound was quoted at 1.3452 US dollars at the time of the London equities close on Monday, higher compared to 1.3373 on Friday.
The euro stood at 1.1759 dollars, higher against 1.1715 dollars. Against the yen, the dollar was trading lower at 156.95 yen, compared to 157.46.
Stocks in New York were higher at the time of the London equity market close. The Dow Jones Industrial Average was up 0.5%, while the S&P 500 and the Nasdaq Composite were both 0.6% higher.
UBS thinks US equities have room to rally further.
“We expect the S&P 500 to reach 7,300 by June next year and 7,700 by the end of 2026, driven by strong estimated earnings growth of 10% and looser Federal Reserve policy. In addition to the transformative force of AI, we believe the structural trends of electrification and longevity will also drive equity performance for the long term,” the Swiss bank said.
The yield on the US 10-year Treasury was quoted at 4.17%, widened from 4.14%. The yield on the US 30-year Treasury was quoted at 4.83%, stretched from 4.82%.
Gold posted another record high, with the price of the yellow metal quoted at 4,440.54 dollars an ounce, up from 4,348.80 on Friday.
Endeavour Mining and Fresnillo tracked gold higher, rising 1.9% and 2.8%, respectively, to become the best performers in the FTSE 100. On the FTSE 250, Hochschild Mining rose 3.7%.
Harbour Energy fell 1.3% after announcing the USD3.2 billion acquisition of LLOG Exploration, which it said will materially improve cash flow and support “competitive shareholder distributions”.
Jefferies analyst Mark Wilson called the deal a “strong positive”.
“In our view this is a game changer of a deal for Harbour Energy,” he said, adding that the acquisition is an “excellent strategic deal”.
The move brings strategic entry into the US and tangible exploration exposure, Mr Wilson explained.
Gambling firm Rank Group shed 4.7% after reporting that its Spanish arm has been the victim of payment fraud.
The Grosvenor casino and Mecca bingo owner said its Enracha and Yo businesses in Spain suffered from payment fraud totalling around 7.1 million euro.
Elsewhere, Enwell Energy plummeted 29% after reporting its gas processing facilities at its Vasyschevskoye gas and condensate field in Ukraine were the subject of an attack by Russian military drones last week.
Brent oil was quoted at 61.87 dollars a barrel at the time of the London equities close on Monday, up from 60.16 dollars late on Friday.
Kathleen Brooks at XTB noted that the oil price increase followed the US boarding a sanctioned oil tanker near Venezuela.
“The US has imposed an oil blockade on Venezuela, to choke off revenues that fund the Maduro government. When the oil blockade was announced last week, it sent the price of oil soaring and helped Brent crude to rise above 60 dollars after it had slid below this key threshold on the back of concerns about excess supply.
“However, there is a concern that Venezuela alone does not currently produce enough oil to move the market for the long term and gains could be fleeting,” she added.
The biggest risers on the FTSE 100 were Fresnillo, up 90.00 pence at 3,260.00p, Airtel Africa, up 6.60p at 333.00p, Endeavour Mining, up 76.00p at 3,986.00p, Rio Tinto, up 93.00p at 5,931.00p, and Melrose Industries, up 5.40p at 582.00p.
The biggest fallers on the FTSE 100 were DCC, down 268.00p at 4,708.00p, Diageo, down 61.50p at 1,617.00p, Coca-Cola Europacific Partners, down 160.00p at 6,820.00p, Pershing Square Holdings, down 98.00p at 4,800.00p and WPP, down 5.70p at 328.70p.
Tuesday’s economic calendar has minutes from the Reserve Bank of Australia meeting, GDP data in Canada and flash quarterly personal consumption expenditures figures in the US.
There are no significant events scheduled in Tuesday’s UK corporate calendar.
– Contributed by Alliance News