LONDON: London stocks gave up early gains and closed lower on Monday as rising yields pushed equities down, while defence firm BAE Systems was among the few bright spots on the large-cap index after winning a contract to build attack submarines.

The exporter-heavy FTSE 100 fell 1.3% amid holiday-thinned trade in some markets including top commodities consumer China.

The yield on UK’s benchmark 10-year note jumped to its highest level since August 23, at 4.57%, as the selloff in the global debt markets resumed amid concerns of central banks keeping interest rates higher for longer.

“UK yields are also pushing higher after last week’s upward revisions to GDP, with bond investors seemingly concerned that the Bank of England may have to hike rates again between now and the end of the year,” Michael Hewson, chief market analyst at CMC Markets UK, said.

Shares in the banking and insurance sectors fell 1.4% and 2.7% respectively, weighing on the index.

Natwest shed 3.4% after brokerage Morgan Stanley downgraded the lender to “equal-weight” from “overweight”.