- FTSE 100 down 1.4%, FTSE 250 falls 1.3%
- UK spared harshest tariffs
- Investors anticipate BoE rate cuts
- Utilities and real estate sectors gain
April 3 (Reuters) - London shares fell on Thursday as investors worldwide abandoned risky assets following U.S. President Donald Trump's announcement of aggressive reciprocal tariffs, stoking widespread fears of a global recession.
The blue-chip FTSE 100 fell 1.4% as of 1027 GMT and the midcap FTSE 250 index dropped 1.3%
Trump's plan - a combination of a 10% baseline levy and higher duties on a number of other trading partners - reverses decades of liberalisation that shaped the global trade order.
The base 10% tariffs go into effect on April 5 and the higher reciprocal rates on April 9. Tariffs of 25% on vehicle imports took effect at midnight.
Britain was spared the most punitive treatment in Trump's tariff announcement on Wednesday when it was hit with the lowest import duty rate of 10%. London said that decision vindicated its approach of trying to strike a new economic partnership with the United States, rather than meeting fire with fire.
Business Minister Jonathan Reynolds warned the tariffs pose "a threat" to Britain through their impact on global trade. He highlighted particular concerns about potential damage to the country's automotive manufacturing industry.
Meanwhile, investors added to bets on Bank of England interest rate cuts with government bond yields falling sharply after the tariffs announcement.
Interest rate futures on Thursday pointed to about 62 basis points of reductions to the BoE's benchmark Bank Rate by December, compared with around 54 bps on Wednesday, which represented a full pricing of two quarter-point rate cuts.
UK's utilities shares, often traded as a bond proxy owing to their stable income regardless of economic situation, touched a five-month high, rising 3%.
Severn Trent, United Utilities Group and SSE were among the top percentage gainers on the blue-chip index, each rising more than 3%.
The rate-sensitive real estate sector climbed 1.7%.
UK banks' shares fell sharply along with other European peers, as the new U.S. tariffs stoked worries about economic growth of the world's largest economy.
Standard Chartered, HSBC Holdings and Barclay's were among the worst performers on the blue-chip index, falling between 5.2% and 7.5%.
Among individual stocks, Currys jumped 14.2% after the electricals retailer raised annual profit forecast.
Reporting by Ragini Mathur in Bengaluru; Editing by Mrigank Dhaniwala
Source: Reuters