• FTSE 100 and FTSE 250 down 1.0%
  • Telecom Plus sees annual profits above estimates
  • Essentra plans to spin off filter business

Oct 3 (Reuters) – Blue chip British stocks hit their March lows on Monday, led by banking and consumer stocks, as markets struggled with uncertainty following the Truss government’s cancellation of tax cuts in its new fiscal policy.

The UK government has reversed plans to cut the top income tax rate after its ‘mini budget’ on Friday prompted ratings agency S&P Global to downgrade its outlook to ‘negative’ and provoked Turmoil in financial markets last week, sending the mid-cap index to its biggest weekly drop since March. Read more

The export-oriented FTSE 100 (.FTSE) and mid-cap FTSE 250 (.FTMC) indices fell 1.0% each at 08:33 GMT.

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Yields on UK government bonds fell below the levels reached when the “mini budget” was presented on September 23, while the pound rose 0.5%.

“Any time you have a government that fundamentally changes its mind, it’s very difficult to plan for and you have to have a risk premium on UK assets because of the uncertainty,” said Patrick Armstrong, chief investment officer. at Plurimi Wealth.

The central problem is still that prices are high, consumer confidence is low, the central bank is unlikely to become dovish anytime soon, he said.

The decline in US equities is accompanied by a decline in global risk appetite, with deteriorating PMI indices weighing on growth prospects.

UK manufacturing output fell for a third consecutive month in September and orders fell for a fourth consecutive month, the data showed. Read more

Bank stocks (.FTNMX301010) fell 1.9%, while consumer companies such as British American Tobacco (BATS.L) and Unilever (ULVR.L) fell 0.8% each.

A rise in oil companies helped limit declines, after crude prices jumped 4% as OPEC+ considered cutting production by more than a million barrels a day.

On the mid-cap index, Essentra Plc (ESNT.L) rose 11.2% after announcing the sale of its filters business and appointing Scott Fawcett, managing director of its components division, as its new chief executive.

Telecom Plus PLC (TEP.L) climbed 16.7% after reporting a strong earnings outlook.

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Reporting by Johann M Cherian in Bangalore; Editing by Savio D’Souza

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