UK shares fall amid domestic fiscal worries, looming tariff deadline

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FTSE 100 down 0.3%, FTSE 250 falls 0.7% *

Homebuilding stocks lead sectoral declines *

MJ Gleeson slumps after warning of lower profit *

Moonpig falls after brokerage downgrade July 4(Reuters) -

London's main stock indexes fell on Friday, weighed down by domestic fiscal worries and weaker global sentiment ahead of a looming tariff deadline. As of 0910 GMT, the benchmark FTSE 100 was down 0.3%, while the domestically-focussed FTSE 250 lost 0.7%. Both indexes are set to end the week lower.

The midcap index ended the second quarter on Monday by logging its largest quarterly gain in over four years, but has since come under pressure as U-turns on welfare reforms have blown a hole in Finance Minister Rachel Reeves' budget plans. The reform bill passed on Tuesday, but with limited cost-reduction measures from the initially expected 5 billion pounds ($6.83 billion) in savings, leading to concerns of raised taxes or spending cuts elsewhere.

S&P Global said the inability to make modest cuts to welfare spending showed the government's "limited budgetary room for manoeuvre." Among sectors, homebuilder stocks led sectoral losses on Friday, dropping 2% after MJ Gleeson warned of profit being at the lower end of market expectations for fiscal 2026 due to subdued demand.

The group slumped 6.7% and was the top decliner on the smallcap index. Larger peers Vistry, Persimmon and Taylor Wimpey fell 3.1%, 1.6% and 1.5%, respectively.

Industrial metal stocks fell, tracking lower metal prices. Anglo American, Antofagasta and Glencore slipped over 1% each. Atalya lost 3%. On the economic data front, S&P's UK construction PMI showed Britain's construction industry downturn reduced in June with homebuilding growth, but commercial building tumbled due to economic worries.

Elsewhere, global markets were subdued after U.S. President Donald Trump said Washington will start sending letters with tariff rates to countries on Friday. Britain remains one of the only countries to have cinched a deal with the U.S.

Among individual stocks, greeting card and gifting retailer Moonpig fell nearly 6% to the bottom of the midcap index after a rating downgrade by Deutsche Bank. ($1 = 0.7323 pounds)

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