LONDON: Miners and travel stocks pressured London's FTSE 100 index on Tuesday, with investors also worried about higher energy costs, supply chain disruptions and a looming rate hike crimping economic recovery.
The blue-chip FTSE 100 index ended 0.2% lower, snapping its three-day winning streak, with miners and travel and leisure stocks among the top drags.
On the macroeconomic front, the UK's labour market showed signs of further recovery as employers added a record-high 207,000 staff to their payrolls in September. Separate data showed the unemployment rate fell to 4.5% in the three months to August, reinforcing bets for a Bank of England rate hike sooner.
"The Bank of England is increasingly wary that the 'cost-push' inflation from the recent surge in energy prices comes at a time when the labour market is tight and workers feel emboldened to ask for a pay rise," said Ambrose Crofton, global market strategist at J.P. Morgan Asset Management.
"It worries that this threatens to reinforce an inflation feedback loop."
The FTSE 100 has gained for the past four consecutive quarters and added nearly 10% this year on accommodative central bank policies and optimism over re-opening economies.
However, the pace of gains has slowed as soaring energy costs and supply chain disruptions fanned inflation concerns, with the Bank of England hinting at adopting a more hawkish stance going ahead.
Adding to inflation concerns, British grocery prices increased 1.7% in the four weeks to Oct. 3 year-on-year, market researcher Kantar said.