By Shashwat Chauhan and Shristi Achar A
(Reuters) -Britain's FTSE 100 fell on Wednesday, bogged down by disappointing earnings from Rio Tinto (LON:RIO), while worries of interest rates remaining higher for longer further dented risk appetite.
The FTSE 100 lost 0.6%, hitting its lowest level in over a week.
London-listed shares of Rio Tinto slumped 3.6% after the global miner posted a 38% drop in annual profit and more than halved its dividend.
That, along with a dip in metal prices, dragged the industrial metal mining sector down 2.6% [MET/L]
Markets were also tracking volatility in U.S. stocks, with investor focus on the release of the minutes of the U.S. Federal Reserve's Jan. 31-Feb. 1 meeting later in the day. [.N]
Concerns about domestic rate hikes prevailed after data on Tuesday showed an unexpected rebound in British business activity in February.
"It looks like inflation and interest rates will be a major determinant of price action in the months ahead as central banks continue to try to keep a lid on price levels," said Victoria Scholar, head of investment at Interactive Investor.
The FTSE 250 midcap index shed 0.8%, falling to its lowest in more than a month
Despite the session's losses, the exporter-heavy FTSE 100 has had a strong start to the year, helped by some positive earnings and an uptick in commodity prices, hitting multiple record highs and breaching the 8000 barrier level.
"If we're going to face that inflation onslaught again, the FTSE 100 will manage better because it's driven by commodities and businesses that are more robust," said Wes McCoy, senior investment director at Abrdn.
Shares of Cineworld slumped 10.3% after media reports said the world's second-largest cinema operator had received 40 non-binding bids, but none for its UK and U.S. assets or nearing its $6 billion secured debt load.
Lloyds Banking Group (LON:LLOY) ended 0.6% higher after falling as much as 3% earlier in the day. Britain's biggest mortgage lender reported a flat annual profit for 2022 as mounting bad loan provisions offset a jump in income.