LONDON: Britain's top share index suffered its biggest loss since mid-August as rising U.S. yields took their toll across global stock markets.

The FTSE 100 fell 1.2 percent to 7,418.34 points, mirroring overnight weakness in Asia and on Wall Street as markets digested prospects of a U.S. interest rate hike.

"Markets across Europe and Asia tripped up on Thursday after a rise in U.S. Treasury yields to levels not seen since 2011", Russ Mould, an investment director at AJ Bell, wrote to his clients.

"The Treasury yield is commonly seen as the risk-free rate for investing, so an increase tends to be negative for other asset classes including shares," he added.

Weighing heaviest was the defensive consumer staples sector.  British American Tobacco, which was trading without entitlement to its latest dividend pay-out, was the biggest faller of the day, shedding 3.8 percent.

Other defensive sectors such as healthcare or consumer discretionary sustained heavy losses and weighed on the index.

Burberry fell 5.6 percent along with shares in European luxury goods companies as persistent concerns over a slowdown in China bite sentiment.

All major sectors apart from financials, as banks typically benefit from rising rates and bond yields, were in the red.

HSBC rose 0.5 percent and RBS ticked up 0.5 percent.

The domestically focused mid cap index also fell, shedding 1 percent.

There, shares of Ted Baker fell 10 percent after the British clothing retailer warned of a "challenging" remainder of the year as it posted a 3.2 percent drop in pretax profit for the first half.

Among other retailers, DFS Furniture shares fell as much as 10 percent, before recovering most of its losses to settle at a 3.1 percent drop, after it said full-year pretax profit retreated by nearly half after Britain's summer heatwave.

Luxury carmaker Aston Martin was down 0.5 percent, extending losses from its stock market debut on Wednesday. It had priced its shares at 19 pounds each, giving it a valuation of $5.6 billion.

British new car sales fell by roughly 20 percent in September, preliminary data showed, as carmakers struggled to adjust to stricter emissions standards.

Separately, Japanese carmaker Nissan said there would be "serious implications" for Britain's manufacturing industry if the United Kingdom fails to secure a trade deal with the European Union as part of Brexit.