Rising yields, tariff uncertainty pressure UK's FTSE 100

(Reuters) -The UK's FTSE 100 closed lower on Thursday as rising bond yields pressured equities and continued uncertainty over U.S. tariffs clouded the outlook for global markets.

The blue-chip FTSE 100 dropped 0.8%, while the domestically focussed FTSE 250 climbed 0.2%.

Banking shares were the biggest drag, with the sector falling 2.7% after rising 1.8% on Wednesday.

UK gilt yields continued to rise amid a global bond selloff sparked by Germany's plans to loosen fiscal spending rules. Both the 10-year and two-year yields touched their highest since January before easing.

Financial markets have been choppy this week after U.S. President Donald Trump's rapid-fire tariff policies dented consumer and business confidence and sank stock markets globally.

U.S. Commerce Secretary on Thursday hinted at tariff reprieve for more goods imported from Mexico and Canada after Trump on Wednesday exempted the auto sector from tariffs for a month.

Data showed the UK construction sector contracted sharply last month. The preliminary reading of the S&P Global/CIPS UK Construction Purchasing Managers' index fell to 44.6 last month from January's 48.1, its weakest level since May 2020 and below forecasts from economists polled by Reuters.

Real estate and REITs fell about 1% each but the construction & materials sector rose.

Reckitt Benckiser rose 2.1% as the Dettol maker's fixed costs declined to 20.9% of net revenue in 2024 from 21.8% a year earlier.

Melrose Industries dropped 18.2% to the bottom of the FTSE 100 after the aerospace parts supplier forecast 2025 revenue below expectations.

Schroders gained 12.6% after the money manager outlined plans to cut 150 million pounds ($194 million) from its costs over the next three years.

Admiral Group gained 5.2% after the insurer posted a record annual profit and said it was in talks to sell its U.S. business.

(Reporting by Lisa Mattackal and Sanchayaita Roy in Bengaluru; Editing by Shounak Dasgupta and Tasim Zahid)