FTSE slips as bank, defence stocks fall; BoE delivers first rate hike in 3 years

By Darshan Kumar R

Nov 5 (Reuters) - Britain's FTSE 100 slipped on Thursday as losses in bank and defence stocks weighed, while the Bank of England raised interest rates for the first time in more than three years.

The FTSE 100 index closed 0.43% lower at 10,782.66 after touching a near three-month high earlier in the session, while the FTSE 250 was down 0.86% on the day after hitting an all-time high.

• The BoE delivered its first interest rate hike in more than three years and signalled that further tightening could follow if the Iran war continues to stoke inflationary pressures

• British inflation is likely to reach around 5% by the middle of next year, the BoE said, more than double its 2% target

• "Clearly rates will need to go up again if energy prices stay high, but it's a question of how many times," said Michael Metcalfe, head of macro strategy at State Street, adding that investors are pricing in at least one further rate hike

• Financials were the biggest drag on the FTSE 100 while banking shares, which posted their strongest gain in nearly six months on Wednesday, fell 1.3%.

•  HSBC, Standard Chartered, NatWest Group and Barclays lost between 0.8% and 2.9% each

• The aerospace and defence sector led sector declines with a 3% fall after Democrats swept the US Congress, raising concerns that military spending could come under greater scrutiny. Rolls-Royce fell 1.8%, while BAE Systems was down 5.4%

• Coca-Cola HBC was the FTSE's biggest decliner for the day with a drop of nearly 18%, its steepest one-day fall on record

• Hikma Pharmaceuticals fell 3.7% after the drugmaker lowered the higher end of its annual profit forecast range

• Cushioning losses, precious metals miners rose 4.2%, supported by higher gold prices

• Investors also sought refuge in defensive stocks, with retailers gaining 1.4%, while the personal care, drug and grocery sector added nearly 1%

(Reporting by Darshan Kumar in Bengaluru; Editing by Sahal Muhammed, Kirsten Donovan)