London, September 25 (Reuters) - UK shares fell on Wednesday, reversing gains from the previous session as investor optimism regarding China's extensive stimulus measures appeared to be overblown. The blue-chip FTSE 100 index was down 0.3% at 0715 GMT, following a 0.3% rise in the prior session driven by a global rally after China announced its largest stimulus measures since the onset of the COVID-19 pandemic.
However, this optimism waned as analysts questioned whether the proposed measures would be sufficient to address the deep-rooted issues within the Chinese economy and stimulate sustained consumer and industrial demand. Despite the Chinese central bank's reduction of its medium-term loan rate on the same day, market sentiment remained subdued.
BCA Research analysts commented, 'Monetary policy remains unlikely to move the needle on Chinese growth... the Chinese economy needs fiscal stimulus, and monetary policy alone isn't sufficient to revive domestic demand.'
The decline in UK equities was widespread, with the beverage sector leading the drop at nearly 1%. Both the banking and life insurance sectors saw losses of about 0.8%. Additionally, an index of oil and gas stocks dipped 0.3% as crude prices fell. In contrast, industrial and precious metal miners recorded gains of 1% and 0.7%, respectively, due to rising copper and gold prices.
The domestically focused mid-cap index remained flat, hindered by financial sector performance. In individual stock movements, real estate portal Rightmove lost 0.5% after rejecting an increased $8.1 billion takeover offer from Australia's REA Group, while retailer DFS Furniture also dipped 0.5% following a 65.7% decline in annual profits.
Reporting by Lisa Mattackal in Bengaluru; Editing by Savio D'Souza