(Reuters) – British stocks closed lower on Monday as investors shied away from high-risk assets after last week's US jobs report reinforced views that the Federal Reserve (US central bank) will be cautious about cutting interest rates this year.
The blue-chip index fell by 0.3%, while the mid-cap index, which focuses on the local market, fell by 0.1%.
Global stocks fell, while bond yields remained high after data on Friday showed US job growth unexpectedly accelerated in December while the unemployment rate fell to 4.1%.
US government bond yields reached multi-month highs, as traders priced in just one interest rate cut from the Federal Reserve this year.
British bonds have been at the heart of the recent sell-off in the global bond market, with a sharp rise in borrowing costs fueling concerns about Britain's financial sustainability. The yield on 30-year bonds jumped to its highest level in 27 years, while the yield on 10-year bonds reached its highest levels since 2008.
British mid-cap companies suffered a nearly 3% decline last week on concerns about UK growth coming under pressure from higher taxes and a spending halt.
Inflation figures on both sides of the Atlantic as well as quarterly GDP estimates in the UK will be in focus later this week.
The energy sector was exceptional, rising 1.4 percent as crude prices rose on expectations that broader US sanctions on Russian oil would force buyers in India and China to look for other suppliers. (or)
The rise in prices affected airline stocks, with shares of British Airways owner IAG, Wizz Air and easyJet (LON:) falling between 2.2% and 3.6%.
Shares of biotechnology company Oxford Nanopore Technologies jumped 8.9% after it expected full-year revenues of about 183 million pounds ($222.27 million), compared to 169.7 million the previous year.
PageGroup shares fell 3.2% after the recruiter issued its second profit warning in six months.
