Pound weighs on London's FTSE 100 after BoE hike

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A worker shelters from the rain as he passes the London Stock Exchange in London
A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008. REUTERS/Toby Melville
  • BoE hikes by an expected 25 bps
  • Banks snap two days of gains
  • Informa down after MS downgrade
  • FTSE 100 down 0.8%, FTSE 250 off 0.1%

March 23 (Reuters) - The export-oriented FTSE 100 closed down on Thursday as the pound gained after the Bank of England raised its main lending rate by 25 basis points.

The FTSE 100 (.FTSE) ended 0.8% down, as the pound rose 0.5% hurting shares of firms that benefit from exports.

The FTSE 350 Food, beverage and tobacco (.FTUB4510) index housing British American Tobacco Plc (BATS.L) fell 2.7% while energy stocks (.FTNMX601010) shed 1.6%.

The BoE raised interest rates for the 11th consecutive time, and said it expects the surge in British inflation to cool faster than before, despite a surprise jump in consumer prices on Wednesday.

The central bank was not due to hold a quarterly news conference by Governor Andrew Bailey and other officials on Thursday, although he is scheduled to make a speech on Monday.

"No surprise today from the Bank of England with a 25bps rate hike, following the bumper inflation data yesterday," said John Leiper, chief investment officer, Titan Asset Management.

"We think there is more to come to combat inflation, even as the bank grapples with financial stability concerns and rising recessionary headwinds."

Banks (.FTNMX301010) fell 2.4%, snapping two straight days of gains.

"The idea of another rate hike was not seen as being friendly in terms of banks because right now your concerns are about easier credit conditions," said Steve Sosnick, chief strategist at Interactive Brokers.

Fears of a banking crisis after the collapse of two U.S. regional lenders and troubles at Swiss bank Credit Suisse have rattled global markets recently. The FTSE 100 has erased most of its gains for the year and is now up 0.6%.

The FTSE 250 midcap index (.FTMC) also fell 0.15% with Inchcape (INCH.L) slumping 12.6%.

Informa (INF.L) fell 2.7% after Morgan Stanley cut its rating on the events organizer's stock to "equal-weight" from "overweight".

Reporting by Shashwat Chauhan and Johann M Cherian in Bengaluru; Additional reporting by Chiara Elisei; Editing by Savio D'Souza and Anil D'Silva

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