By Johann M Cherian and Devik Jain
(Reuters) - The main UK stock indexes snapped a three-session winning streak on Wednesday, dragged down by financials and miners, while Tesco (LON:TSCO)'s profit forecast fanned worries of a worsening cost-of-living crisis in Britain and rattled the retail sector.
The export-oriented FTSE 100 ended 0.5% lower, while the more domestically oriented FTSE 250 closed 1.5% down.
Weighing the most on the FTSE 100 was the financial sector, which slipped 1.5%, while precious metal miners dropped 2.2%.
Further weighing on the mood, U.S. data showed a spurt in private sector hiring in September, suggesting demand for workers remained strong despite rising interest rates and tighter financial condition.
Both the UK stock indexes had logged their best day in months on Tuesday in part due to softer U.S. economic data and a smaller-than-expected interest rate hike from Australia stirred hopes for less aggressive tightening by the Federal Reserve.
"Investors are just taking a pause and thinking about, expectations about the Fed and other central banks," said Daniela Hathorn, market analyst at Capital.com.
"The focus on the Bank of England is going to be how are they actually implementing longer term measures to combat inflation without hindering growth. There's a lot of pressure on the BoE as people still think that it's coming in short in terms of their measures."
Data for September showed Britain's private-sector economy suffered the sharpest contraction in activity since a COVID lockdown early last year, underlining the challenge facing Prime Minister Liz Truss who on Wednesday emphasised her push for economic growth.
Risk assets have taken a hit this year as central banks globally undertake monetary tightening to tame surging inflation.
Among individual stocks, Tesco fell 4.1% after Britain's biggest retailer forecast full-year profit at the lower end of its previous estimate. Rival Ocado (LON:OCDO)'s shares slumped 10%, while the wider retailer sector dipped 3.6% on the news.
Shares of Hill & Smith Holdings rose 4.4% after the infrastructure products maker bought U.S.-based construction equipment manufacturer National Signal Inc for initial cash consideration of $25.3 million.