- UK inflation rate rises to 4% in December
- Antofagasta slides as outlook disappoints
- 888 Holdings slumps as forecast falls below est
- FTSE 100 down 1.3%, FTSE 250 off 1.6%
Jan 17 (Reuters) - The UK's FTSE 100 extended its early-week selloff on Wednesday after a stronger-than-expected inflation reading tempered expectations around sharp interest rate cuts this year, while underwhelming data from China hurt commodity-linked stocks.
The blue-chip index, fell 1.3%, extending losses for a third straight session and hitting a one-and-a-half-month low.
Keeping the FTSE 100 under pressure, sterling edged up after data showed Britain's annual rate of consumer price inflation rose for the first time in 10 months in December, with a rise in tobacco duty behind the increase.
Consumer price inflation rose 4.0% last month, above economists' estimates of a 3.8% increase.
The data dampened investors' conviction that the Bank of England (BOE) will start cutting rates in May this year. Traders are pricing in a more than 50% chance the central bank will hold rates in May.
"The rise in inflation delivers something of a wake-up call for investors who have been considering the BoE "home and dry" on getting inflation sustainably back to target," noted Victoria Clarke, UK chief economist at Santander CIB.
"We maintain our view that the BoE will not be keen to cut too soon; we still have summer in for the first cut."
Shares of rate-sensitive homebuilders, and REITs dropped about 2.5% each, on the prospect of rates staying higher for longer.
Energy and mining giants such as Shell, and Glencore, dipped on the back of weaker commodity prices after data showed China's economy grew 5.2% in 2023, slightly more than the official target, but the recovery was far shakier than many analysts had expected.
UK-listed shares of Antofagasta, slid 2.9% after the Chilean miner reported a 2% rise in 2023 copper production but left its 2024 output outlook unchanged.
The midcap FTSE 250 index dropped 1.6% to hit a one-month low.
888 Holdings, tumbled 14.2% as the bookmaker forecast its 2024 profit to be at the lower end of market expectations as its heavy investments in artificial intelligence and other automation programmes offset its cost-saving measures.
Reporting by Sruthi Shankar in Bengaluru; Editing by Mrigank Dhaniwala
Source: Reuters