The FTSE 100 started October sharply lower, falling more than 1% in early trading and extending Wednesday’s decline.
The FTSE 100 fell around 120 points, or 1.1%, to 10,486 on Thursday morning, extending its weak start to October as higher global bond yields pressured equity markets.
The more domestically focused FTSE 250 also fell 0.9%, showing that the selling was broad rather than confined to heavyweight international stocks.
Among the limited group of blue-chip risers, Rolls-Royce gained 1.9%, while Polar Capital Technology Trust advanced 1.1%.
Precious-metals miners Fresnillo and Endeavour Mining also moved higher, supported by gold trading above US$4,200 an ounce.
Among mid-cap stocks, XPS Pensions rose 4.8%, AO World gained 4.7%, Ferrexpo advanced 2.8% and Raspberry Pi added 2.7%.
At the other end of the FTSE 100, British American Tobacco fell 3.2% and Weir dropped 2.7%, making them two of the largest early decliners.
The dominant pressure remains the rise in global government bond yields, which increases the discount rate applied to future corporate earnings and raises financing costs across the economy.
Attention now turns to the final UK manufacturing PMI reading for September, which could provide the next indication of whether domestic economic momentum is holding up despite tighter financial conditions.
For investors, the immediate question is whether bond yields stabilise. Until they do, isolated gains in miners, defence and technology are unlikely to offset the broader valuation pressure on the London market.
