LONDON: UK’s FTSE 100 slipped on Tuesday, dragged down by banking and mining stocks, while strong jobs data supported the case for a Bank of England interest rate hike later this week.

The blue-chip FTSE 100 fell 0.3%, while the mid-cap index dropped 1.0%.

Industrial miners dropped 2.4% as metal prices fell on concerns about the impact of surging COVID-19 cases in top metals’ consumer China.

Meanwhile, official figures showed Britain’s unemployment rate dropped below its pre-pandemic rate in the three months to January, while pay rose faster than expected.

“The modest further acceleration in nominal wage growth seen in today’s report coupled with lead indicators showing further tightening ahead are likely to provide further justification for the MPC to continue to ‘front load’ policy tightening,” RBC analysts said in a note.

Money markets are fully pricing in a 25 basis points interest rate hike by Bank of England on Thursday, its third hike in a row as it seeks to tame the surge in inflation that has been intensified by Russia’s invasion of Ukraine.

However, banks, which usually benefit from higher rates, fell 1.8% and weighed on the benchmark index.

“You would expect financial stocks to go up but right now there are a lot of other uncertainties with the war and global financial stability,” said Ipek Ozkardeskaya, senior analyst at Swissquote.

The supply shock of the COVID-19 pandemic and a second one sparked by Russia’s invasion of Ukraine have combined to pose a serious risk of stagflation in Europe, Goldman Sachs said in a note.

Among individual stocks, events group Informa Plc rose 3.4% after reporting higher annual profit, as more trade shows and conferences resumed from the pandemic hiatus and its digital business expanded.

TP ICAP, the world’s biggest inter-dealer broker, fell 15.3% after reporting an 81% profit slump last year.