London's FTSE 100 retreats as financials weigh; Airtel Africa tumbles

FTSE 100 Drops 1.4% as Financials Slide and Airtel Africa Shares Tumble

Market Overview and Key Drivers

Sept 18 (Reuters) - London's FTSE 100 pulled back from a more than one-week high on Friday as financial stocks weighed, ending a week packed with economic data and central bank decisions.

The blue-chip FTSE 100 index closed 1.4% lower at 10,659.13 points, logging a small weekly gain. The midcap FTSE 250 finished 0.6% lower on the day, but still recorded its sharpest weekly rise since early August.

Sector Performance

Financials and Banks

• On Friday, financial stocks were the biggest drags on the index. Banks lost 2.1%, with Lloyds and HSBC falling 2.9% and 1.6% respectively.

Telecoms and Airtel Africa

• Telecom stocks were the biggest percentage decliners with a 4.8% tumble. Airtel Africa lost 11.3% after a report said its Airtel Money was considering downsizing its London IPO.

Construction and Materials

• On the flip side, construction and materials stocks rose 1.3%, led by gains in Galliford Try.

Economic Data and Central Bank Actions

UK Consumer Activity

• Data showed British consumers unexpectedly increased their shopping in August, although they cut fuel purchases after prices jumped.

Bank of England Decisions

Interest Rate Outlook

• The report comes a day after the Bank of England held interest rates steady but warned that policymakers might have to raise borrowing costs if the Iran war drags on.

• Brokerages changed their rate calls following the decision, with Barclays joining J.P.Morgan in expecting a hike in November.

Bond Sales and Market Reaction

• The central bank on Thursday also paused UK government bond sales for six months and halted long-dated gilt sales entirely, days after a global bond rout. Gilts steadied on Friday after last session's rally.

US Federal Reserve Policy

• The US Federal Reserve hiked rates by 25 basis points this week, and the central bank reinforced its fight against inflation, sparking a rally across global markets on Thursday.

Notable Stock Movers

• Among individual stocks, Softcat was among the top losers on the FTSE 250 index with a near 4% fall after the IT firm agreed to buy US-based GDT at an enterprise value of $1.05 billion.

Global Market Sentiment

• Globally, the mood was also sour as elevated developed market bond yields pressured riskier assets. [MKTS/GLOB]

(Reporting by Purvi Agarwal and Johann M Cherian in Bengaluru; Editing by Alex Richardson)