UPDATE 2-London stocks drop as economy shrinks at record pace in March

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* First-quarter GDP falls 2%, likely to worsen in April
* Aston Martin plunges as lockdowns hammer demand
* FTSE 100 down 1.5%, FTSE 250 off 1.8%

(Adds comments, updates prices to close)
By Shreyashi Sanyal
May 13 (Reuters) - UK stocks fell on Wednesday after data
showed the economy contracted in March at a pace never seen
before as the coronavirus crisis escalated, while analysts
warned of more pain ahead.
The blue-chip FTSE 100 .FTSE shed 1.5%, snapping a
five-day winning streak and wiping out most of the gains it made
this month on hopes that an easing in restrictions would revive
business activity.
Britain's economy shrank by a record 5.8% in March, while
first-quarter GDP contracted by 2%, with figures for April
likely to show an even bigger fall in economic output.

The Bank of England has predicted the biggest economic slump
in 300 years.
"Second quarter figures that cover a much longer period of
lockdown will obviously be far worse," said Hugh Gimber, global
market strategist at J.P. Morgan Asset Management.
"While economic activity should improve from the second half
of this year, it still appears that a rebound is likely to be
very gradual."
The mid-cap FTSE 250 .FTMC also shed 1.8%, with travel
stocks .FTNMX5750 plummeting again after a warning from
European travel company TUI (LON:TUIT) TUIGn.DE about thousands of job
cuts to ride out a virtual halt in global travel. The retail index .FTNMX5370 dipped 1.4% after surveys
showed British retail spending plunged by nearly a fifth and a
broader measure of consumer spending fell by more than a third
in April.
"It's now very hard to imagine a rapid 'V-shape' recovery,
and we don't expect a return to pre-virus levels of activity
until 2022 at the earliest," said James Smith, developed markets
economist at ING.
"The risk now is that a wider proportion of firms are
beginning to make more permanent changes to their business
models, now the potential longevity of the crisis is becoming
clearer."
After rallying in April on a raft of global stimulus,
investor sentiment has soured this month on the double whammy
from fears of a second wave of COVID-19 cases and rising
U.S.-China tensions.
Britain's death toll from the respiratory disease now
exceeds 40,000 and is by far the worst yet reported in Europe,
an ominous sign as the government starts to reopen an economy
crippled by the lockdown measures.
In the latest sign of the corporate hit from the pandemic,
Aston Martin AML.L slumped 16% to the bottom of the FTSE 250
after posting a first-quarter pretax loss as sales dropped by
nearly a third. Oil and gas producer Premier Oil PMO.L rose 2.6% after
saying it expects to be free cash flow neutral despite slumping
prices due to its hedging programme. Stock Spirits STCK.L jumped 17.5% after posting a jump in
first-half earnings as consumers stocked up on liquor ahead of
tax hikes in its biggest markets, Poland and Czech Republic.