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London’s blue chip FTSE 100 index closed lower despite an agreement in US debt ceiling negotiations.

US president Joe Biden and house speaker Kevin McCarthy reached a long-awaited deal to raise the nation’s debt ceiling, but it must be approved by Congress where it is expected to face criticism.

Investors remained cautious and the FTSE 100 closed 105.13 points (1.38%) lower at 7,522.07.

In the UK, shop price inflation accelerated in May to a new peak, although food price inflation decelerated despite remaining at an elevated level.

Asda merger

Asda owners the Issa brothers have confirmed the £2.3 billion merger of the supermarket chain with their EG Group petrol station business.

The deal was described by the brothers as a “transformational step”.

The proceeds from the tie-up will be used to repay debt, along with $1.4bn (£1.1bn) from a recent sale and lease back deal in the US.

EG Group will continue to operate in the Australia, Belgium, France, Germany, Italy, Luxembourg, The Netherlands and the US, and retain about 30 UK sites