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* Tesco gains after raising its full-year outlook
* Page Group climbs on strong profit forecast
* UK 10-year yields surges to highest since May 2019
* FTSE 100 down 1.2%, FTSE 250 off 1.4%
(Updates to close)
By Shashank Nayar and Bansari Mayur Kamdar
Oct 6 (Reuters) - London's blue-chip stocks fell on
Wednesday, pressured by fears of higher inflation, while
supermarket retailer Tesco topped the index on raising its
annual outlook and strong first-half results.
The FTSE 100 index eased 1.2%, recording its worst
session since August, weighed by energy and
mining stocks, both down 2.6% and 1.7%
respectively.
A recent survey found that more British manufacturers plan
to raise their prices than at any other point in the past three
decades, as cost pressures continue to build.
Inflation fears rising on the back of soaring energy costs,
supply side and labour shortages have weighed on equities, as
central banks look to pull back their pandemic era monetary
support and hike rates to relieve cost pressures.
"There's a big concern over increasing inflationary
pressures coming at the same time of evidence that the UK
recovery is slowing, and fears of stagflation are understandably
growing too," said Stuart Cole, head of macro economics at
Equiti Capital.
Banking stocks gained 1.0% after bond yields
surged past 1.1%, the highest level since the spring
of 2019, in signs of rising inflationary pressures.
The FTSE 100 has recovered around 40% from its pandemic lows
hit in March 2020, and around 8% so far this year on rebounding
optimism and supportive monetary policies.
HSBC Holdings led the pack after UBS raised its
price target and upgraded the stock to "buy" from "neutral".
The domestically focused mid-cap index fell 1.4% to
a near three-month low, with consumer discretionary stocks
leading declines, after Barclays downgraded the sub-index to
"underweight".
Tesco rose 5.9% after raising its full-year outlook
following strong profit in the first half results.
Global recruitment firm PageGroup climbed 8.3%
after it raised its profit forecast.
Tobacco group Imperial Brands fell 3.5%, although it
said it was on track to meet its full-year operating profit
forecast.
(Reporting by Bansari Mayur Kamdar, Shashank Nayar and Amal S;
Editing by Sriraj Kalluvila, Rashmi Aich and Mark Heinrich)
