London stocks slipped on Thursday after stronger-than-expected UK economic growth reinforced expectations that the Bank of England will raise interest rates, while mining companies suffered heavy losses amid concerns over global demand.
The FTSE 100 fell 0.1% to 10,710.77 points in early trading, while the domestically focused FTSE 250 declined 0.6% to 24,184.96.
Official figures showed the UK economy grew by 0.1% in August, slowing from July’s 0.4% expansion but beating economists’ forecasts of a 0.1% contraction.
The unexpected growth strengthened market expectations of further monetary tightening, as policymakers weigh the resilience of the economy against inflationary pressures linked to higher energy prices.
Traders are pricing in a 93% probability of a Bank of England rate increase in November, with market expectations pointing towards four quarter-point rises by September 2027.
If realised, the increases would take the Bank Rate from its current 3.75% to 4.75%, potentially increasing borrowing costs for households and businesses.
Mining stocks led the FTSE 100’s decline, with Antofagasta plunging 6.5%, Rio Tinto falling 4.2% and Anglo American losing 4%.
The sector came under pressure amid concerns that higher US interest rates could weaken economic growth and reduce demand for industrial commodities, including copper and iron ore.
A sharp sell-off in Asian semiconductor shares also weighed on global sentiment, although the FTSE 100’s relatively limited exposure to technology stocks helped contain its losses.
Defensive stocks attracted buyers, with consumer healthcare group Haleon rising 2.6% and hotel operator Whitbread gaining 2.4%. Tobacco shares also found support as investors shifted towards businesses considered less sensitive to economic uncertainty.
The market reaction follows stronger-than-expected US inflation figures, which have increased concerns that central banks may need to maintain restrictive monetary policies for longer.
Despite the modest decline in the FTSE 100, sharp losses among major miners highlight growing uncertainty over global growth, while the latest UK economic figures have increased attention on the Bank of England’s November interest rate decision.
