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FTSE 100 down 0.3%, FTSE 250 down 1.4%

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Sterling, British gilts sell off with spotlight on UK

finances

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Ithaca Energy ( ITHLF ) down after top investors sell stake at a

discount

Sept 2 (Reuters) - UK shares fell on Tuesday, pushed

down by rate-sensitive banks, utilities and real estate stocks

on mounting investor concerns about the country's finances.

The blue-chip FTSE 100 fell 0.3% by 1013 GMT, while

the domestically focussed midcap index fell 1.4%,

touching its lowest in over two months.

Britain's 30-year borrowing costs rose to their highest

levels in over 27 years, while sterling fell almost 1%, amid

investor anxiety about the UK's ability to get its finances

under control.

Thirty-year gilt yields touched a peak of 5.69%,

up five basis points on the day, their highest since May 1998.

Finance minister Rachel Reeves is expected to raise taxes in

her autumn budget to remain on course for her fiscal targets,

potentially adding to the challenge of speeding up the economy.

"Markets are asking whether Reeves can walk the line between

responsibility and delivery," said Nigel Green, CEO of deVere

Group.

"The Budget will be her moment of truth. If she falters,

borrowing costs will spike further, sterling will suffer, and

confidence will drain."

Heavyweight banking stocks, which had

marginally rebounded in the previous session after Friday's

declines, fell on the day with NatWest ( NWG ), Barclays ( BCS )

and Lloyds down about 1% each.

They had fallen on Friday after a think-tank recommended a

new tax on lenders as a possible way for Reeves to raise

revenue.

The real estate sector declined, with Rightmove ( RTMVF )

and Segro ( SEGXF ) down 2.7% and 2.2%, respectively.

The homebuilders' index lost 2.7%, while

utility stocks fell with SSE down 2.7% and

United Utilities declining 2.8%.

Retailers and consumer groups like Tesco ( TSCDF ), M&S

and British American Tobacco ( BTI ) also declined.

Communication services stocks such as BT Group and

Vodafone ( VOD ) slipped, while Airtel Africa ( AAFRF ) lost 3.1%.

Aerospace and defence companies also fell

with Rolls-Royce down 2%.

Conversely, the energy sector added 1.4%

tracking higher oil prices. Shell and BP rose

1.6% and 1%, respectively.

The healthcare sector rose 1%, while precious

metal miners advanced tracking higher gold prices

with Fresnillo up 1.8%.

In company news, Ithaca Energy ( ITHLF ) shares fell 11.2%

after its two largest shareholders sold about 3% stake in the

company at a discount.