FTSE 100 slides as election looms, Sainsbury falls

By Purvi Agarwal

(Reuters) -London's FTSE 100 tumbled to a two-month low Tuesday as investors were cautious ahead of the parliamentary elections, although an uptick in oil prices helped offset the decline.

The blue-chip FTSE 100 was down 0.5% at 8,126.96, falling below the crucial 8,200 mark, while the mid-cap FTSE 250 was off 0.3% at 0800 GMT.

Investors refrained from placing big bets ahead of the UK parliamentary elections on Thursday, where the Conservatives look set to be replaced after 14 years.

"Wariness has returned amid ongoing political uncertainty, and markets are still digesting the repercussions of the first round of the French elections," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Most major sectoral indexes were trading in the red, with the exception of energy shares.

Oil giant BP gained more than 1%, after oil prices held near two-month highs on expectations of rising fuel demand from the summer travel season and possible U.S. interest rate cuts. [O/R]

GSK slipped 1.2% after a Delaware judge rebuffed a request by the drugmaker and others to appeal a ruling allowing over 70,000 lawsuits claiming that the heartburn drug Zantac caused cancer to go forward.

Sainsbury's, Britain's second largest supermarket group, fell 4.3% after it kept its annual financial guidance as it reported a 3% rise in first-quarter underlying sales.

Prices in British shops rose at the slowest pace in almost three years last month, according to industry figures that underscore how inflation has cooled.

The last key inflation reading showed that May inflation had fallen to the Bank of England's 2% target for the first time in nearly three years. However, investors do not expect it to help Prime Minister Rishi Sunak's fortunes in the poll.

U.S. job openings report is due later in the day, alongside Federal Reserve Chair Jerome Powell's speech.

"There is still some concern about how long high interest rates will linger for in the United States, so there is (also) a certain amount of external pressure," Hargreaves Lansdown Streeter said.

(Reporting by Purvi Agarwal in Bengaluru; Editing by Mrigank Dhaniwala)