British stocks lose steam on inflation, tariff worries

(Reuters) -British equities closed lower on Wednesday, as investors trimmed their bets on the pace of interest rate cuts by the Bank of England following stronger-than-expected inflation data.

The blue-chip FTSE 100 dropped 0.6%, touching its lowest level in over a week, while the midcap FTSE 250 fell 0.8% to a two-week low.

Data showed British inflation surged to a 10-month high of 3.0% in January, exceeding expectations and challenging the BoE's confidence in long-term price stability.

Interest rate futures were pricing about 52 basis points of reductions to the BoE's Bank Rate by December, equivalent to just over two quarter-point rate cuts, compared with more than 60 bps of cuts priced into the market earlier this week.

Global stocks also came under pressure as U.S. President Donald Trump's latest tariff threats on auto, semiconductor and pharmaceutical imports injected a sense of caution into the markets.

In company news, Glencore's London-listed shares tumbled 7.3%, the most among FTSE 100 components, after the global miner posted lower earnings and recorded $2.3 billion in impairment losses.

The company also said it is considering moving its primary listing from London.

Trainline fell 7.7% to a near four-month low after J.P. Morgan downgraded the stock to "neutral" from "overweight".

Jet2 tumbled 10.6% after the travel company warned of profit margin pressure due to high inflation increasing costs and reducing consumer holiday spending.

Peers Easyjet and Wizz Air were down about 4% each.

(Reporting by Ragini Mathur and Sanchayaita Roy in Bengaluru; Editing by Shreya Biswas and Chris Reese)