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* U.S. central bank chief warns of prolonged economic slump
* Housebuilders slide as surveys suggest fall in prices
* Lloyd’s of London estimates COVID-19 bill at up to $4.3 bln
* Investment management firm 3i rises after keeping dividend
* FTSE 100 down 1.5%, FTSE 250 off 1.4% (Adds analyst comments; updates prices)
By Sagarika Jaisinghani
May 14 (Reuters) - London’s FTSE 100 fell for a second straight day on Thursday as investors worried that a recovery from a coronavirus-led economic slump would be slower than expected even as several hard-hit countries started easing lockdowns.
The blue-chip FTSE 100 was down 1.5%, with battered energy and travel and leisure stocks leading declines. The mid-cap FTSE 250 shed 1.4%.
Insurance stocks fell 1.3% after Lloyd’s of London said it was likely to pay up to $4.3 billion in claims related to the COVID-19 pandemic, while underwriting and investment losses for the global non-life insurance sector could reach a record $203 billion.
The two main UK stock indexes have now given up all the gains made this month as hopes of a speedy revival in business activity were dashed after U.S. Federal Reserve Chair Jerome Powell warned of an “extended period” of weak economic growth.
“Investors are finally starting to realise that the stimulus support may not be enough to compensate for the rise in unemployment and the wave of bankruptcies that we are going to see at some point,” Rabobank economist Stefan Koopman said.
“We are in this for the long haul and that basically means that the current risk-reward valuations in the market are quite skewed.”
On Wednesday, the UK posted its sharpest ever GDP contraction in March, with economists warning the slump could be worse in April. For the year, the Bank of England has predicted the worst recession in three centuries.
Later in the day, the weekly U.S. jobless claims report is likely to show millions more Americans, including white collar workers, filing for unemployment benefits as the hit from the pandemic spills over into a broader swath of the economy.
With the UK starting to ease some restrictions, housebuilder Persimmon said it had restarted 65% of its construction work and was reopening sales offices on May 15.
However, its shares fell 2.9% along with the wider housebuilding index as surveys suggested British house prices would only recover to their pre-lockdown levels in 11 months’ time.
“The roller coaster recovery continues to be the theme of the week,” said Stephen Innes, chief global markets strategist at AxiCorp.
“With the wall of worry building around the economy and secondary breakout fears, it’s unlikely a significant move higher this side of (contracts) expiry will unfold.”
WH Smith reported an 85% slump in group sales in April, although a 400% rise in online book sales helped offset some of the damage from the closures of its kiosks and stores, sending its shares slightly higher in morning trading.
Fund supermarket Hargreaves Lansdown jumped 6.9% to the top of the FTSE 100 on higher trading demand from its retail clients and an increase in net new business.
Investment management firm 3i Group Plc rose 2.9% after sticking to its plan to pay a 2020 dividend at a time when a slate of UK companies have cancelled payouts to shore up liquidity. (Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Anil D’Silva)