London shares post sharp weekly falls as upward rate pressures mount

June 23 (Reuters) – British stocks fell on Friday with homebuilders leading the declines, completing a week full of losses after the Bank of England’s massive rate hike, while pharmaceutical company GSK jumped after reaching a settlement in his heartburn drug litigation.

The benchmark FTSE 100 index (.FTSE) fell 0.5%, while the FTSE 250 (.FTMC) The mid-cap index lost 1.5% on the day.

Both indices posted steep weekly declines, with the FTSE 100 posting its worst weekly performance since the US banking turmoil in March, while the FTSE 250 posted its worst weekly performance in over a year.

Rate Sensitive Home Builders (.FTNMX402020) were the main losers this week after the BoE increase its bank rate by an unexpected 50 basis points on Thursday as it tries to curb runaway inflation.

Khaki (PSN.L)which is part of the blue chip FTSE 100, fell 4% after HSBC downgraded the homebuilder’s rating to ‘hold’ from ‘buy’, while the broader index dipped 2.9%.

“The reason interest rate increases tend to be faster in the UK is because mortgage rate terms reset much faster,” said Steve Sosnick, chief strategist at Interactive Brokers.

The rain of economic indicators continued, with data showing Britain retail sales rose unexpectedly in May, while the service sector showed signs of slowing down this month.

Another British dataset revealed consumer sentiment it reached its highest level since January 2022.

TO US Federal Reserve and rate hikes by major central banks this week continued to hit confidence.

In a bright spot, GSK (GSK.L) jumped 4.9% after the drugmaker hit a dispute settlement in the US for its heartburn medication Zantac.

industrial metal miners (.FTNMX551020) they were among the largest weights, down 2.8% due to falling copper prices.

Meanwhile, British banks agreed to give homeowners who fail to make mortgage payments a year’s grace before foreclosure, as the government sought to ease the stress of rising interest rates.

The banks index (.FTNMX301010) fell 1% at the close.

Reporting by Ankika Biswas, Khushi Singh and Shashwat Chauhan in Bangalore; Edited by Sherry Jacob-Phillips and Mark Heinrich

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