Stocks in the U.K. dropped on Tuesday, with energy shares falling as oil prices linger in bear-market territory, and as some banks struggled to recover from the weekend's stress tests. The FTSE 100 dropped 0.4% to 6,668.54, with only the health care and consumer-goods sectors showing modest gains. The index on Monday fell 0.5%. Oil slips: Shares of Royal Dutch Shell PLC fell 1.5% and those in BP PLC lost 0.6% as oil prices slipped below $40 for the first time since April. Oil futures on Monday dropped more than 3% to finish in bear-market territory, marking a 20% fall from a recent peak, as worries about a supply glut refuse to fade. U.S. supply data from the American Petroleum Institute are due later Tuesday. Banks under pressure: Barclays PLC shares fell 2.5%, and Royal Bank of Scotland PLClost 2.5%, extending losses after the results of European bank stress tests. Other movers: Travis Perkins PLC shares fell 2.6% as the building supplies retailer sounded a cautious note about the impact of Brexit on its business, saying it "did experience weaker demand in the run up to and immediately following the referendum." But shares of Direct Line Insurance Group PLC jumped 5.6% as the insurance company said it's issuing a special dividend payment despite a decline in first-half pretax profit. InterContinental Hotels Group PLC shares were up 0.9%. The hospitality chain operator posted a fall in interim net profit, but said it is confident about the outlook for the full year. Waiting for BOE: Investors may also be taking to the sidelines ahead of a Bank of England rate decision later in the week. "With the jury still very much out in terms of whether the Bank of England will plump for a rate cut on Thursday, we could now find that investors are reluctant to do much more than sit on their hands for the next couple of days," Tony Cross, market analyst at Trustnet Direct, said in a note. The "post-Brexit rally may appear to be running out of steam, but there's going to be little incentive to cash out if fresh stimulus measures — however token they are — prove to be just a matter of hours away." The BOE is widely expected to cut its benchmark interest rate to 0.25% from 0.5% as its seeks to cushion the U.K. economy from Brexit-related pressure. More economic news is due Tuesday, with a reading of U.K. construction activity in July expected at 9:30 a.m. London time, or 4:30 a.m. Eastern Time. Sterling: The pound traded at $1.3218, up from $1.3191 late Monday in New York. The pound dropped Monday after a weak reading of manufacturing activity in July. "Short bets against the currency are building, especially ahead of Thursday's rate decision," from the Bank of England, wrote Tobias Davis, head of corporate treasury sales at Western Union Business Solutions. "Lashings of quantitative easing or perhaps something more creative is also in the limelight, as [Bank of England Governor Mark] Carney and his crew held off from pulling the trigger last month," he added. Source: MarketWatch
