Dec 27 () - The UK's FTSE 100 gave up early gains and sunk to lows not seen since August 2016 as a dip in oil stocks on oversupply concerns overrode initial cheer from Wall Street where strong U.S. data had helped drive a dramatic rebound.
The FTSE 100 was 0.5 percent lower by 0927 GMT after initially rising as much as 0.6 percent, while the FTSE 250 mid-cap index also pared initial gains to trade about flat.
Both UK indexes initially gained on the back of record point surge on Wall Street on Wednesday when the three main U.S. indexes recorded their biggest intraday percentage gains in almost a decade.
"The sustainability of this (Wall Street) rally is questionable due to mounting concerns over economic growth next year..." Margaret Yang, CMC Markets analyst, told .
"The outlook remains cloudy on many political and economic uncertainties over trade war, Brexit, U.S. government shut down and continuous rate hike by the Federal Reserve that will slowly drain market liquidity."
Oil major BP dropped nearly 2 percent and was the biggest drag on the main index. Shell 0.6 percent lower.
Crude prices dropped after soaring 8 percent in the previous session, hurt by worries over a glut in crude supply and concerns over a faltering global economy.
Global markets have been rattled by fears over a slowdown in economic growth, political uncertainties stemming from a government shutdown in the United States and Fed's retained plans for more rate hikes in 2019.
Uncertainties over the terms of UK's exit from the European Union and Prime Minister Theresa May's highly-debated divorce deal has aggravated fears at home, putting the indexes on track for their worst yearly losses since the financial crisis in 2008.
Further dampening the mood was data that showed business leaders' confidence in the British economy has sunk to its lowest level in over one and a half years as the risk of a no-deal Brexit grows.
"The mid-term trend remains bearish for FTSE 100 and FTSE 250, and market confidence needs to be restored by major shifts in prospect of Brexit, growth and broader market rebound for this trend to be reversed", Yang added.
In news-driven moves, the mid-cap index benefited from a 6 percent rise in online trading platform Plus500 that led finance stocks higher. Plus500 said it expects its 2018 results to top market expectations thanks in part to market volatility in recent months.
"We believe this company has just earned more than a quarter of what we, the highest estimate in the market, expect for 2019," Liberum analysts said.
AIM-listed shares of Earthport Plc, a provider of payment services, roughly quadrupled in value to match the 30-pence-a-share buyout offer from U.S. payments firm Visa Inc.
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