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UK Shares Fall as Private Sector Activity Declines; Howden Joinery Shines

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London's FTSE 100 closed 0.40% lower on Wednesday as Britain's private sector economy contracted for the first time since April 2025, while the US threatened additional tariffs on goods allegedly made with forced labor.

As a sharper decline in service sector output more than offset accelerating manufacturing production, S&P Global UK Composite PMI fell to a 13-month low of 49.7 in May from 52.6 in April, final data showed. The flash estimate stood at 48.5.

"Many service sector companies noted that the Middle East conflict had an adverse impact on sales pipelines and general business prospects. Those in the hospitality and transportation sectors typically commented on squeezed discretionary spending and pressure from sharply rising input costs, while professional services firms reported a setback from rising risk aversion among clients. Business investment spending on technology services remained a bright spot for parts of the service economy, however," S&P Global Market Intelligence Economics Director Tim Moore said.

Rising oil prices and the latest exchange of hostilities between the US and Iran also weighed on the global market. "Starting with the Middle East, we've seen increasing pessimism that a US-Iran deal to re-open the Strait of Hormuz is imminent," Deutsche Bank Research said. "New clashes took place overnight as US forces conducted strikes against Qeshm Island while Iran fired missiles and drones towards Kuwait and Bahrain, with the IRGC saying it targeted the US 5th Fleet headquarters in Bahrain. Meanwhile, further Israel-Lebanon talks are expected today, according to the US."

In corporate news, Howden Joinery Group (HWDN.L) climbed 3.18% after agreeing to buy the holding company of vertically integrated online kitchen business Ultima Furniture Systems, d/b/a DIY Kitchens. The British specialist trade kitchen and joinery supplier is purchasing the business at an enterprise value of 390 million pounds sterling.

B&M European Value Retail (BME.L) surged 14.60% as profit after tax for the 52 weeks ended March 28 dropped to 164 million pounds from 319 million pounds a year ago, while the discount retailer's revenue increased to 5.78 billion pounds from 5.57 billion pounds, supported by new store openings.

Looking ahead, S&P Global Construction PMI data for May is due on Thursday, while the Halifax House Price Index for the same month is expected on Friday.

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