UK stocks drop over 1% as inflation worries weigh; Tesco jumps

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London's blue-chip stocks fell on Wednesday pressured by fears of higher inflation, while supermarket retailer Tesco topped the index on raising annual outlook and strong first-half results.

A recent survey found that more British manufacturers plan to raise their prices than at any other point in the past three decades, as cost pressures continue to build.Rising inflation fears on the back of soaring energy costs, supply side and labour shortages have weighed on equities, as central banks look to pull back their pandemic era monetary support and hike rates to calm cost pressures.

"There's a big concern over increasing inflationary pressures coming at the same time of evidence that the UK recovery is slowing, and fears of stagflation are understandably growing too," said Stuart Cole, head of macro economics at Equiti Capital.gained nearly 1% after bond yields hit their highest since May 2019 in signs of rising inflation pressures.

The FTSE 100 has recovered around 40% from its pandemic lows hit in March 2020 and around 8% so far this year on re-opening optimism and supportive monetary policies.led the pack after UBS raised its price target and upgraded the stock to "buy" from "neutral".fell 1.3% to a near three-month low, with consumer discretionary stocks leading declines, after Barclays downgraded the sub-index to "underweight".

 

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