LONDON: British stocks weakened on Friday as investors locked in gains in bank shares, while the prospect of more policy tightening saw the domestically-exposed midcap index mark its weakest month in nearly two years.
The blue-chip FTSE 100 fell 1.2% with financials weighing the most after a run of strong gains.
The banking sub-index rose more than 12% this month on support from higher yields, as investors expect lenders to benefit from rising interest rates this year.
“Looking at the way the FTSE 100 and the big banking names have performed year-to-date, this drop is potential profit taking ahead of the weekend and the Bank of England meeting due next week where expectations are for a 25 bps rate hike,” said Michael Hewson, an analyst at CMC Markets UK.
But heavyweight mining stocks sank as the prospect of rising interest rates weighed on metal prices, while energy companies also retreated after recent gains.