London stocks fall on fears about Fed's policy path



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Barclays gains on price target increase

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Mondi drops on rating downgrade

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FTSE 100 down 0.6%, FTSE 250 off 1.2%

(Updates to market close)

By Johann M Cherian and Shristi Achar A

Dec 6 (Reuters) - London's main stock indexes fell on Tuesday, tracking a weak session on Wall Street after strong U.S. data fuelled fears about aggressive rate hikes by the Federal Reserve.

The export-oriented FTSE 100 .FTSE fell 0.6%, marking its biggest percentage loss in over three weeks, while the domestically focused FTSE 250 .FTMC dropped 1.2%.

New York's benchmark S&P 500 .SPX tumbled over 1% after the chief executive of top U.S. bank JPMorgan & Chase JPM.N warned of a mild to more pronounced recession ahead, a day after strong U.S. services sector data fed into fears of a longer rate hiking cycle by the Fed.

"I think what's happening in the UK markets is more symptomatic of what's being seen everywhere else," said Stuart Cole, head macro economist at Equiti Capital.

"After the data we had from the U.S., the hopes that we were getting close to the pivot point of hikes have been dashed and now sentiment has taken a hit."

Precious and base metal miners .FTNMX551030 dropped 2.5% and 0.5% respectively, as metal prices broadly weakened.

The Bank of England

is widely expected to hike rates by 50 basis points

next week, even though Britain is heading into a long albeit shallow recession. Investors will also be watching inflation data next week for clues on the path of monetary policy tightening.

"The bigger picture here is not what the next CPI print says, because one data point can't tell us anything about a trend," said Vivek Paul, UK Chief Investment Strategist at BlackRock Investment Institute.

"The bigger picture is what the Bank of England is telling us, and they are going to continue taking us into restrictive territory."

Among single stocks, SSP Group SSPG.L rose 3.0% after the snack chain group said its average sales rose above pre-pandemic levels as more people returned to work and holiday demand picked up from pandemic lows.

Barclays BARC.L rose 1.6% as J.P Morgan raised the bank's price target to 220 pence from 180 pence.

Packaging company Mondi Plc MNDI.L dropped 4.7% to hit the bottom of the FTSE 100 as Credit Suisse downgraded the stock to "underperform".
Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Vinay Dwivedi, Rashmi Aich and Mark Heinrich

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