Sept 24 (Reuters) - London shares fell on Thursday as crude oil prices continued to rise amid little progress towards a US-Iran deal, fuelling inflation concerns and lifting government bond yields.
The blue-chip FTSE 100 index fell 0.05% to 10,700.05 points by 1007 GMT, while the midcap FTSE 250 slipped 0.60%.
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Oil prices extended gains after climbing 4% in the previous session as US-Iran diplomatic talks showed no concrete sign of progress. UK's energy giants rose, with BP gaining 1.9% and Shell adding 1.4%.
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Industrial stocks were the biggest drags, with Rolls Royce and BAE Systems down 2% and 1.3% respectively.
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British banks dipped 1%, with heavyweights HSBC and Standard Chartered down over 1% each.
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Homebuilder Vistry slipped 6.3% after it lowered its annual profit expectations and said it would take a £470 million ($622.51 million) hit from its strategic overhaul.
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Raspberry Pi jumped 7.7% after the single-board computing company reported higher first-half revenue and pretax profit.
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Bond markets were in focus again as UK gilt yields rose in line with global bond yields, with the benchmark 10-year gilt yield hitting a more than one-week high at 5.38%.
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British finance minister John Healey may accept a smaller fiscal buffer to reduce tax rises in next month's budget as investors signalled the gilt market would not be spooked by a more modest headroom target, the Financial Times reported.
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Bank of England Deputy Governor Clare Lombardelli said that interest rates will likely have to rise if energy prices stay elevated, barring clear evidence of a weaker economy.
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Traders are fully pricing in at-least one 25-basis-point hike by the BoE this year, according to data compiled by LSEG.
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Investors are also focused on the Trump-Xi summit, seen as largely symbolic despite efforts to project stability between both sides amid deep rivalry.
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Insurer Standard Life and technology services provider Computacenter shed 4.3% and 3% respectively, as their shares traded ex-dividend.
Reporting by Anand Gopal in Bengaluru; Editing by Vijay Kishore
Source: Reuters