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* FTSE 100 down 1.2 pct
* Financials drop after Fed meeting
* BoE splits on rates, paving way for May rise
* Reckitt jumps after ditching Pfizer unit bid
* Ted Baker under pressure after outlook comments(Adds details, closing prices)
By Danilo Masoni and Kit Rees
The BoE kept interest rates on hold but two policymakersunexpectedly voted for a hike, cementing expectations thatborrowing costs will rise in May.
"This meeting can certainly be interpreted as a step towardsa hike in May. The pound ran out of steam having already had anexceptional week and having rallied hard into the announcement,"Fiona Cincotta, Senior Market Analyst at City Index. "The FTSEfell steadily on the back of the stronger pound."
The FTSE 100 fell below 7,000-point as the outcomeof the BoE meeting briefly lifted the pound further. The indexended down 1.2 percent at 6,952.59 points to a 15-month low.
Financials were the biggest sectoral weight on the index,wiping off around 30 points as shares in big international banksHSBC and Barclays fell more than 2 percentfollowing guidance from the
Domestically focused banks, however, which are moresensitive to expectations over domestic interest rates, slightlyoutperformed their international peers. RBS fell 1.4percent and Lloyds Bank ended down 1.6 percent.
Elsewhere jitters over
Shares in Micro Focus were the biggest fallers,down 6.3 percent after Moody's changed its outlook on thesoftware company's ratings to negative, following issues MicroFocus flagged earlier in the week around its purchase of HewlettPackard Enterprise assets.
A jump in Reckitt Benckiser's shares provided somerelief, with the consumer goods giant up 4.8 percent at the topof the index.
Shares in Reckitt rose after the company pulled out of thebidding for Pfizer's consumer health unit, assuagingworries that Reckitt would need to over-leverage or consider adilutive rights issue.
"Investors need to be wary of firms which make multipleacquisitions, especially if they are big, and seen or describedas transformational as the scope for something going wrong isconsiderable," Russ Mould, investment director at AJ Bell, said.
Shares in pharma stock GlaxoSmithKline declined 1.7percent. It might now have a better chance of buying the Pfizerbusiness but analysts were concerned that a potential deal couldput pressure on its finances.
Among mid caps, Ted Baker was the latestretailer to feel the heat as its shares dropped 12.9 percent.
The fashion retailer cautioned over a tough globalenvironment ahead despite a 12 percent rise in annual pretaxprofit thanks to higher online sales.
Nevertheless analysts at Liberum said that Ted Baker'sresults showed a "solid performance", especially against such atough backdrop.
(Reporting by Kit Rees and Danilo MasoniEditing by Raissa Kasolowsky)
