FTSE 100 closes higher as bond yields rise

The blue-chip FTSE 100 index closed 0.1% higher at 10,330.5 points after rising as much as 0.8% earlier in the day

UK’s blue-chip FTSE 100 closed slightly higher on Tuesday as the global move higher in government bond yields hit sentiment, ​overshadowing optimism stemming from labour market data that eased worries of ‌an immediate rate hike.

The blue-chip FTSE 100 index closed 0.1% higher at 10,330.5 points after rising as much as 0.8% earlier in the day. The midcap FTSE 250 ​reversed its initial gains to drop 0.2%.

Data showed Britain’s employers reined in ​their hiring and posted fewer job vacancies in April, prompting ⁠investors to cut their bets on Bank of England interest rate hikes.

For ​the MPC, this sharpens the policy tension: while energy‑driven inflation risks dominate near ​term, the labour market backdrop is already loosening, increasing the risk that policy remains too tight and entrenches unnecessary weakness, said Jefferies economist Modupe Adegbembo.

Traders expect a 29.1% chance ​of a rate hike at the June meeting, according to data compiled ​by LSEG.

Long-dated government bond yields resumed their uptrend on Tuesday as the inflationary impact of ‌the ⁠Iran war unsettled investors.

Yield on both the 10-year gilt and the 30-year gilt were higher on the day after inching lower in the last session.

Most FTSE 350 sectors trended higher, with medical equipment and services and personal goods ​among the top ​gainers.

A drop in ⁠metal prices hit miners listed in the UK, with the sector for precious metal miners slipping 3.7%, and industrial ​metal miners down 2.7%.

Meanwhile, political uncertainty still remained in ​focus as ⁠Keir Starmer earlier this week reiterated that he would remain at the helm, but several of his Labour Party’s lawmakers have called for him to quit.