London stocks slip as interest rate angst persists; ex-div stocks weigh

(Fixes typographical error in 8th paragraph to make it “dividend” instead of “divided”)

By Ankika Biswas and Shashwat Chauhan

(Reuters) -British equities fell on Thursday, as sentiment around global interest rates remaining higher for a longer period pressured stocks, while Vodafone and Sainsbury going ex-dividend contributed to losses.

The internationally-focused FTSE 100 slipped 0.3%, while the domestically-focused FTSE 250 midcap index lost 0.2%.

Surprise rate hikes by the Bank of Canada and the Reserve Bank of Australia this week have spooked investors globally, sparking concerns that major global central banks could stick to their rate tightening cycles for longer.

“The headwind from tighter monetary policy and generally tighter financial conditions is building up again,” said Andrea Cicione, head of research at TS Lombard.

Cicione said the surprise hikes by the RBA and BoC potentially give more incentive for the Bank of England to hike again.

Traders have nearly fully priced in a 25-basis point hike by the BoE in two weeks time.

Growing rate hike bets pushed the pound nearly 1% higher, further pressuring the exporter-heavy FTSE 100 index. [GBP/]

Vodafone Group and Sainsbury were amongst top decliners, falling 5.5% and 3.8% respectively, as the telecom firm and Britain’s second-largest supermarket chain traded without the entitlement for dividend.

Homebuilder Crest Nicholson Holdings dropped 7.1% after warning of further slowdown in the British housing market.

The broader homebuilders index shed 0.9%.

Precious metal miners and chemicals were the worst-hit sectors, losing 1.4% and 1.7% respectively.

Stubbornly-high inflation, jitters around more rate hikes and concerns about a worsening global economic environment have kept London stocks range-bound following extensive losses last month.

Among individual movers, FirstGroup jumped 13.9% after the transport operator beat annual profit forecasts.

Investors now await data on the UK’s labour market, economic growth and monthly industrial and manufacturing output next week to gauge the state of the economy and the policy tightening path.

(Reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru; Editing by Rashmi Aich, Sonia Cheema and Jonathan Oatis)