LONDON's FTSE 100 edged lower yesterday driven by investors fretting over how stern central bankers will be with tackling inf lation.

The capital's premier index dropped 0.22 per cent to 7,471.51 points, while the domestically-focused mid-ca FTSE 250 index, which is more aligned with the health of the UK economy, inched down 0.01 per cent to 19,305.23 points.

London traders are eyeing the start of the annual symposium of monetary policy starting today at the Jackson Hole resort in the US state of Wyoming.

Cooling US inflation had ignited hopes Federal Reserve chief Jerome Powell may signal the pace of rate hikes will slow at his flagship speech on Friday.

The rate of prices dropped to 8.5 per cent last month from 9.1 per cent, a big- ger fall than expected.

However, Fed officials have rolled back those expectations, prompting market participants to ramp up their bets on more rate rises.

Higher borrowing costs tend to weigh on stocks by knocking company valuations and cooling household and business spending.

The City also geared up their forecasts for further rate rises from the Bank of England, with money markets now betting borrowing costs will hit four per cent to tame inflation. HSBC fell 1.9 per cent against its largest Ping An insisted its break up calls were driven by maximising shareholder returns.

FTSE 100-lister industrials dragged the index lower. Rio Tinto and Anglo American lost more than two per cent.

The pound weakened over 0.4 per cent against the dollar to buy $1.1783.

(c) 2022 City A.M., source Newspaper