London stocks hit by Shell's historic dividend cut
Shell also suspended the next tranche of its share buyback programme and said it was reducing oil and gas output by nearly a quarter after its net profit almost halved in the first quarter
UK stocks fell on Thursday after Shell cut its dividend for the first time since World War Two in the face of a drop in oil demand caused by the coronavirus pandemic.
The blue-chip FTSE 100 fell 0.5% after opening in positive territory, slowing the index's path to its biggest monthly gain since 2011, after three straight sessions of gains.
"Central bank liquidity is pushing all asset prices up, but reality keeps giving us a very sombre message," said Andrea Cicione, head of strategy at TS Lombard in London. "And today it was the dividend cut by Shell".
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Shell also suspended the next tranche of its share buyback programme and said it was reducing oil and gas output by nearly a quarter after its net profit almost halved in the first quarter.
Earlier in the session, investors cheered signs of progress in developing a treatment for the novel coronavirus.
Positive partial results from a trial showed US-based Gilead Sciences Inc's remdesivir helped speed up recovery from the disease. That bolstered global optimism on Thursday, but it wasn't enough to keep British shares in the black.
The FTSE 100 has recovered about 24% from an eight-year low it reached in March, but analysts have warned of another selloff as new data underline the damage to the economy and companies try to bolster cash reserves as a global recession looms.
Reckitt Benckiser rose 4% after reporting strong demand for its Lysol disinfectants, Muncie cough syrup and Dettol soap in the first quarter. It said it now expected performance in 2020 to be better than initially forecast.
Shares in Lloyds Banking Group were down 4.1% after the company saw its pretax profit all but wiped out in the first quarter, after becoming the latest bank hobbled by huge provisions against expected bad loans caused by the coronavirus pandemic.
British supermarket group Sainsbury's estimated a hit of 500 million pounds ($623 million) from the costs of dealing with the coronavirus pandemic and said it would defer any dividend payment decisions until later in the financial year. Its shares fell 3%.
AstraZeneca gained 2% after it said it will make and distribute the coronavirus vaccine being developed by the Jenner Institute and Oxford Vaccine Group under an agreement with the University of Oxford.
UK's domestically focussed mid-cap index was down slightly.
