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FTSE 100, FTSE 250 down over 1%, set for weekly decline

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Gilt yields rise on Reeves' income tax U-turn ahead of

budget

Nov 14 (Reuters) - London stocks tumbled on Friday,

heading toward weekly losses, as gilt yields surged following

reports that the UK government had abandoned plans for income

tax hikes in the upcoming budget.

The blue-chip index FTSE 100 fell 1.9% as of 12:13

GMT, on pace to log its steepest one-day decline since April 9,

when global markets reeled from U.S. President Donald Trump's

tariff announcements.

The domestically focused FTSE 250 dropped 1.7%,

heading for its worst single-day performance since late

September.

According to reports, British Finance Minister Rachel Reeves

has abandoned plans to raise income tax in this month's budget,

a decision that has severely undermined investor confidence in

the government's ability to meet fiscal targets. This

uncertainty propelled gilt yields higher.

The market turmoil extended across asset classes, with the

sterling weakening by nearly a quarter of a percent while stocks

experienced a sharp, widespread decline.

Heavyweight banking stocks led the losses

with a 3.3% drop.

Precious metal miners tumbled 4.4% as gold

prices fell.

Market sentiment globally turned negative after hawkish

comments from U.S. Federal Reserve officials on Thursday clouded

prospects for a December rate cut, while uncertainity around

U.S. economic data and concerns about an AI bubble added to

investor anxiety.

In the UK, the aerospace and defence sector

fell 2.6% with engineering firm Rolls-Royce declining

over 2% for the second straight session. Melrose Industries

edged 2.6% lower, after the GKN Aerospace owner

maintained its full-year guidance.

The investment banks & brokerages sector

dropped 2.6% and was set for an 11% fall this week, the most

among all sectors.

Commercial property firm Land Securities ( LSGOF ) reported a

drop in property valuations in the first half of its fiscal

year, sending its shares down 5.4%.

In a rare bright spot, shares of hospitality company PPHE

Hotel Group surged 13.5% following news that key

investors were considering a stake sale.

The energy sector experienced the smallest

losses as oil climbed after a Ukrainian attack halted exports at

a Russian port.