London close: FTSE and pound slide, borrowing costs surge on Burnham leadership bid

(Sharecast News) - London stocks tumbled on Friday, led lower by miners and utilities, while sterling fell and borrowing costs shot higher as investors reacted to the prospect of Andy Burnham's potential return to Westminster. The FTSE 100 closed down 1.7% at 10,195.37. The pound fell 0.6% against the dollar at 1.3327, suffering its worst week in 18 months after the Mayor of Greater Manchester - who is considered more likely to favour a looser fiscal stance - announced plans to stand as the Labour party's candidate in a by-election in Makerfield.

The news came after ex-minister Josh Simons said he would step down to allow Burnham a way back into the Commons.

The yield on the 10-year gilt jumped to 5.13% - its highest level since 2008, while the yield on the 30-year gilt hit a 28-year high at 5.87%.

Patrick Munnelly at Tickmill Group, said: "For markets, the issue is not simply leadership drama - it is the potential fiscal direction of a post-Starmer Labour Party. Burnham's pitch of 'business-friendly socialism; may be designed to reassure corporates, but investors are focused on the spending and borrowing implications. With UK public finances already stretched and long-end gilt yields recently testing multi-decade highs, the market has little tolerance for any sign that fiscal discipline could weaken.

"The resignation of Wes Streeting as health minister has further destabilised the political backdrop, with Streeting also seen as a potential contender should a formal challenge emerge. The result is a longer, noisier political process that risks keeping a UK-specific premium embedded in sterling, gilts and domestic equities."

More broadly, investors were mulling the outcome of the meeting between US President Donald Trump and China's Xi Jinping.

Susannah Streeter, chief investment strategist at Wealth Club, said: "There had been hopes that the US-China summit would be a catalyst for a breakthrough in the Iran standoff or in trade relations. However, the meeting between Xi Jinping and Donald Trump was big on warm words and symbolism but not outcomes.

"Instead of reassurance, the Chinese premier's focus on Taiwan, warning missteps between the two superpowers could create clashes and conflicts, has caused nervousness about fresh geopolitical fractures looming. With diplomatic efforts aimed at resolving the Middle East conflict in limbo, fresh uncertainty has flooded in."

In equity markets, miners were under the cosh as gold, silver and copper prices fell, with Fresnillo, Endeavour, Hochschild, Antofagasta and Anglo American among the worst performers.

Utilities - which tend to fall when government bond yields rise - were also sharply lower, with Severn Trent, National Grid, SSE, United Utilities, Centrica and Pennon all in the frame.

Centrica was also in focus after agreeing to pay £20m into Ofgem's voluntary redress fund and further compensate customers whose homes were broken into by debt collectors working for British Gas to illegally fit prepayment meters, in some cases where residents were vulnerable or had disabilities.

Construction products distributor Grafton Group fell as it said it delivered a "resilient" start to 2026, but warned that rising cost pressures due to the Iran war could dent market demand and volumes.

Student accommodation provider Unite was also weaker after an AGM statement.

On the upside, Hiscox surged following a report that Canada's Intact Financial is exploring a potential bid ⁠for the insurer. According to Insurance Post - which cited sources at the British Insurance Brokers' Association - Intact ‌is ⁠looking at a big target and its CEO is known to be a fan of ​Hiscox, having ​spoken ⁠highly of it in the past.

3i Group clawed back some ground, having tanked on Thursday after the private equity and infrastructure investment firm pointed to slowing sales at its biggest holding, Dutch discount retailer Action.

BP and Shell gushed higher as oil prices rose, while Aberdeen was boosted by an upgrade to 'buy' from 'neutral/high risk' at Citi, which said there was "still lots to play for".

Market Movers

FTSE 100 (UKX) 10,195.37 -1.71% FTSE 250 (MCX) 22,596.14 -1.02% techMARK (TASX) 5,832.99 -1.48%

FTSE 100 - Risers

Hiscox Limited (DI) (HSX) 1,841.00p 12.32% 3i Group (III) 2,210.00p 4.64% JD Sports Fashion (JD.) 72.02p 2.50% Relx plc (REL) 2,423.00p 2.45% BP (BP.) 552.20p 2.13% Diageo (DGE) 1,529.50p 1.97% The Sage Group (SGE) 867.60p 1.47% Shell (SHEL) 3,194.50p 1.46% Experian (EXPN) 2,598.00p 1.33% Haleon (HLN) 332.90p 1.15%

FTSE 100 - Fallers

Airtel Africa (AAF) 328.40p -10.81% Fresnillo (FRES) 3,335.00p -10.04% Antofagasta (ANTO) 3,810.00p -9.48% Severn Trent (SVT) 2,882.00p -8.04% National Grid (NG.) 1,188.00p -7.94% SSE (SSE) 2,271.00p -7.65% United Utilities Group (UU.) 1,280.00p -7.45% Centrica (CNA) 189.25p -6.40% Anglo American (AAL) 3,833.00p -5.66% Smurfit Westrock (DI) (SWR) 2,861.00p -4.86%

FTSE 250 - Risers

Gamma Communications (GAMA) 1,009.00p 8.15% Lancashire Holdings Limited (LRE) 625.50p 6.11% Abrdn (ABDN) 237.60p 5.13% Avon Technologies (AVON) 1,614.00p 4.53% Playtech (PTEC) 359.60p 4.05% Kainos Group (KNOS) 814.50p 3.49% Pantheon Infrastructure (PINT) 119.00p 2.76% Premier Foods (PFD) 209.20p 2.75% Diversified Energy Company (DI) (DEC) 1,206.00p 2.55% W.A.G Payment Solutions (EWG) 106.00p 2.12%

FTSE 250 - Fallers

Pennon Group (PNN) 488.40p -8.45% Endeavour Mining (EDV) 4,537.00p -7.05% XP Power Ltd. (DI) (XPP) 1,806.00p -6.33% Hochschild Mining (HOC) 617.00p -6.23% Pan African Resources (PAF) 140.80p -5.63% Drax Group (DRX) 799.50p -5.61% Renishaw (RSW) 4,984.00p -5.25% Oxford Instruments (OXIG) 2,956.00p -4.65% BlackRock World Mining Trust (BRWM) 982.00p -4.47% Safestore Holdings (SAFE) 627.00p -4.35%