By Amal S and Shashank Nayar

(Reuters) – London’s FTSE 100 fell on Thursday with heavyweight financial and oil shares leading declines, along with miner Rio Tinto after it severed all ties with Russian businesses and also traded ex-dividend.

The blue-chip FTSE 100 closed down 1.3% at 7,099.09 points, with oil heavyweights Shell and BP, as well as Rio Tinto and finanical firms HSBC and Prudential the top drags on the index.

Shell dropped 2.4% after saying it faces further writedowns from exiting Russia, flagging that it had $0.4 billion in Russian downstream assets as well as the $3 billion in other projects announced previously.

Global sentiment also took a hit as soaring U.S. inflation cemented the case for a Federal Reserve rate hike and as the European Central Bank sped up its stimulus exit programme despite rising economic risks from the conflict in Ukraine. [MKTS/GLOB]

Talks between Russia and Ukraine failed to bring any respite in the conflict, adding to gloomy sentiment across risk assets.

Banking shares gave back most of their Wednesday gains as shorter and longer end yields snapped their three-day winning streak.

“I think today is very much just kind of paying back some of yesterday’s outsize move. Yesterday’s gains were overdone – probably they were a technical reaction to European markets being deeply oversold and were due some kind of bounce,” said Neil Wilson, chief market analyst at Markets.com.

UK shares have been consistently outperforming markets in the United States and the rest of Europe this year, as rising oil prices have supported the commodity-heavy index.

Rio Tinto became the first major mining company to announce it was cutting all ties with Russian businesses. Shares of the miner fell 4.7%.

The domestically focused mid-cap index slipped 0.6%.

Among other stocks, British online fashion retailer Boohoo jumped 13.2% after it forecast 2021-22 core earnings in line with reduced guidance, reassuring investors worried by a recent slowdown in sales growth.

Evraz Plc fell 10.3% after the Russian steelmaker cancelled an interim dividend payment and after Britain sanctioned its biggest shareholder Roman Abramovich.

National Express gained 1.2% on plans to resume dividend payouts in 2022.

(Reporting by Amal S in Bengaluru; Editing by Subhranshu Sahu, Krishna Chandra Eluri and Susan Fenton)