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FTSE falls as Fed reignites fears over rate hikes

FTSE falls as Fed reignites fears over rate hikes

The FTSE 100 has fallen as investor fears over interest rate rises reignited after the publication of minutes from the last meeting of the US Federal Reserve.

The UK blue-chip index fell 66 points, or 0.9%, to 7,216 points, after a sell-off in US and Asian markets overnight on the prospect of faster interest rate rises by the US central bank.

Minutes from the Fed's January meeting showed 'a majority of participants' believed 'a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate'.

The S&P 500 and Dow Jones, which had been making gains, swung into losses yesterday, as interest rate fears sparked another bond market sell-off.

Yields on 10-year Treasury's hit a four-year high of 2.95%, although they have since fallen back to 2.923%.

The US market falls spilled over to Asia, with Japan's Nikkei down 1.1% and Hong Kong's Hang Seng dropping 1.5%.

'That stock markets remain in a volatile state is perfectly illustrated by the latest session on Wall Street,' said Lee Wild, head of equity strategy at Interactive Investor.

'Just as it seemed traders had acclimatised to inflation, rising interest rates and higher bond yields, the fears that caused this month's crash were reignited by minutes from the Federal Reserve's last meeting.'

Consumer staples stocks, prized for their reliable income streams, were caught up in the bond market sell-off and took the most points off the FTSE 100.

British American Tobacco (BATS) was the heaviest faller, down 4.5% at £42.50, on weaker-than expected 2017 sales growth.

Rival Imperial Brands (IMB) was close behind, down 3.1% at £25.83, as the shares went 'ex-dividend'.

Barclays (BARC) jumped to the top of the index, up  4.9% at 211.9p, as the bank said it would restore its full dividend of 6.5p per share, having halved the payout in 2016 to fund restructuring.

Dividend news also buoyed Centrica (CNA), up 4.4% at 138p, as the British gas owner kept its full-year payout unchanged at 12p despite a 17% fall in profits.

On the FTSE 250, shares in Moneysupermarket (MONY) slumped 17.3% to 272p as the price comparison website warned earnings would not grow this year as it shifts strategy.

It was joined at the bottom of the index by Playtech (PTEC), down 11.2% at 687.4p as the gambling technology company reported a fall in revenue from its gaming division at the start of the first quarter.

Go-Ahead (GOG) was the biggest riser, up 14.4% at £15.33, as the transport operator reported a 19% jump in profits.

AA (AAAA) meanwhile recovered some ground from yesterday's heavy sell-off, up 6.3% at 88.9p.

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