(Reuters) – British shares ended lower on Monday as investors shied away from risk assets after last week’s U.S. jobs report reinforced views that the Federal Reserve will be cautious about cutting interest rates this year.
The blue-chip fell 0.3%, while the domestic market-focused mid-cap index slipped 0.1%.
Global stocks fell, while bond yields remained elevated after data on Friday showed US job growth unexpectedly accelerated in December, while the unemployment rate fell to 4.1%.
US Treasury yields touched multi-month highs as traders priced in just one rate cut from the Fed this year.
UK bonds have been at the center of a recent sell-off in global bond markets, with a sharp rise in borrowing costs fueling concerns about Britain’s fiscal sustainability. The yield on the 30-year bond jumped to a 27-year high, while the yield on the 10-year bond was the highest since 2008.
UK mid-cap traders suffered a nearly 3% drop last week on concerns that UK growth will be pressured by higher taxes and a slowdown in spending.
Inflation data from both sides of the Atlantic as well as UK quarterly GDP estimates will be in focus later this week.
The energy sector was the exception, rising 1.4% as crude oil prices rose on expectations that broader US sanctions on Russian oil would prompt buyers in India and China to look to other suppliers. [O/R]
Higher prices weighed on airline shares, with British Airways owner IAG, Wizz Air and easyJet (LON: ) falling between 2.2% and 3.6%.
Biotech firm Oxford Nanopore Technologies jumped 8.9% after forecasting full-year revenue of around 183 million pounds ($222.27 million) versus 169.7 million a year earlier.
PageGroup fell 3.2% after the recruiter issued its second profit warning in six months.
