Rising yields, tariff uncertainty pressure UK stocks

March 6 (Reuters) - London-listed shares lost ground on Thursday as rising bond yields pressured equities and continued uncertainty over U.S. tariffs clouded the outlook for global markets.

The blue-chip FTSE 100 .FTSE dropped 1.1% at 1050 GMT, while the domestically focussed FTSE 250 .FTMC slipped 0.2%.

Banking shares were the biggest drag, with the sector .FTNMX301010 falling 2.8% after rising 1.8% on Wednesday.

UK gilt yields, meanwhile, continued to rise, amid a global bond selloff sparked by Germany's plans to loosen fiscal spending rules. Both the 10-year GB10YT=RR and two-year yields GB2YT=RR touched their highest since January, pressuring rate-sensitive stocks.

Trade war fears also remained firmly on the radar. On Wednesday, U.S. President Donald Trump exempted the auto sector from tariffs on Canada and Mexico for a month.

Meanwhile, data showed the UK construction sector contracted sharply last month. The preliminary reading of the S&P Global/CIPS UK Construction Purchasing Managers' index fell to 44.6 last month from January's 48.1, its weakest level since May 2020 and below forecasts from economists polled by Reuters.

The construction & materials sector .FTNMX501010 was flat on the day.

Reckitt Benckiser's RKT.L shares rose 1.8% as the Dettol maker's fixed costs declined to 20.9% of net revenue in 2024 from 21.8% a year earlier.

Melrose Industries MRON.L dropped 10.4% to the bottom of the FTSE 100 after the aerospace parts supplier forecast 2025 revenue below expectations.

Admiral Group ADM.L gained 5.2% after the insurer posted a record annual profit and said it was in talks to sell its U.S. business.

Most UK sectors were in the red, but chemicals .FTNMX552010 rose 2.1%, lifted by a 11.7% jump in RHI Magnesita's UK-listed shares RHIM.L.

Elsewhere, a Bank of England survey showed companies expect to raise prices faster in the coming 12 months.

Focus was also on the European Central Bank's policy meeting later in the day. The bank is widely expected to cut interest rates, but commentary on the risks of U.S. tariffs and government spending plans will be closely watched.

 
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