UK's FTSE 100 posts biggest weekly drop since April as bond rout rattles investors

Oct 2 (Reuters) - The UK's FTSE 100 saw its steepest weekly drop since April on Friday, hurt by a sell-off in government bonds that pushed yields higher and dented risk appetite.

The blue-chip FTSE 100 index closed 0.32% higher on the day at 10,461.95 points, but fell 2.2% for the week. The midcap FTSE 250 also ended the week marginally lower, at 24,194.24.

• Wild volatility in bond and currency markets kept investors on edge this week, but weaker-than-expected jobs data on Friday reduced odds of a near-term rate hike by the US Federal Reserve, reassuring investors

• Oil prices fell 2% after a sharp rise a day earlier following reports of talks in Europe on additional diesel and crude stock releases, easing concerns over tight global energy supplies [O/R]

• Gilt yields dropped, with the benchmark 10-year gilt yield falling 4.09 basis points to 5.3624% after climbing to its highest since 2007 in the previous session.

• The retreat in yields helped push rate-sensitive homebuilders marginally higher after a 5% drop a day earlier.

• Still, banks continued to remain under pressure, with the index of UK lenders suffering its biggest weekly drop since April

• Among stocks, IG Group tumbled 22.6% after the online trading platform cut its 2026 revenue growth forecast, citing weak market conditions. Peers Plus 500 and CMC Markets declined 5.1% and 4%, respectively

• Miner Glencore rose 3% after forecasting 2026 marketing profit above $5 billion, surpassing long-term guidance after a near-record first half

• Pub chain J D Wetherspoon climbed 12.5% after reporting stronger sales growth since July, aided by sunny weather, while warning of rising costs and closures

(Reporting by Anand Gopal in Bengaluru; Editing by Shinjini Ganguli and Tasim Zahid)