LONDON: UK’s FTSE 100 fell to a three-month low on Thursday with banks leading declines as a sharp rise in global bond yields to fresh multi-decade highs fanned inflation concerns and dampened investor sentiment.
The blue-chip FTSE 100 index closed down 1.68 percent at 10,428.7 points, marking its fourth straight day of losses and its biggest one-day decline since May 15, while the midcap FTSE 250 slipped 1.62 percent.
The yield on the British 30-year gilt surged to its highest since early 1998 at 5.9352 percent. The benchmark 10-year gilt yield climbed to 5.4033 percent, its highest since 2007.
Financials were the biggest drag on the FTSE 100. Banks fell 4.2 percent to their lowest in more than three months as jitters mounted ahead of the budget later this month.
Banking heavyweights HSBC and Barclays dropped about 4 percent each, while NatWest fell 5.4 percent.
Cyclical stocks came under stress as higher oil prices and surging yields reinforced worries that persistent inflation could keep interest rates higher and weigh on economic growth.
The selloff “is much more to do as well with concerns over the fiscal outlook of the UK as we head towards the budget later this month,” Fiona Cincotta, senior market analyst at StoneX, said.