Banks, utilities drag London stocks lower on fiscal worries

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 (.FTSE), opens new tab fell 0.3% by 1013 GMT, while the domestically focussed midcap index (.FTMC), opens new tab fell 1.4%, touching its lowest in over two months. The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. 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 (.FTNMX301010), opens new tab, which had marginally rebounded in the previous session after Friday's declines, fell on the day with NatWest (NWG.L), opens new tab, Barclays (BARC.L), opens new tab and Lloyds (LLOY.L), opens new tab 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 (.FTUB3510), opens new tab declined, with Rightmove (RMV.L), opens new tab and Segro (SGRO.L), opens new tab down 2.7% and 2.2%, respectively. The homebuilders' index (.FTNMX402020), opens new tab lost 2.7%, while utility stocks (.FTUB6510), opens new tab fell with SSE (SSE.L), opens new tab down 2.7% and United Utilities (UU.L), opens new tab declining 2.8%. Retailers and consumer groups like Tesco (TSCO.L), opens new tab, M&S (MKS.L), opens new tab and British American Tobacco (BATS.L), opens new tab also declined. Communication services stocks such as BT Group (BT.L), opens new tab and Vodafone (VOD.L), opens new tab slipped, while Airtel Africa (AAF.L), opens new tab lost 3.1%. Aerospace and defence companies (.FTNMX502010), opens new tab also fell with Rolls-Royce (RR.L), opens new tab down 2%. Conversely, the energy sector (.FTNMX601010), opens new tab added 1.4% tracking higher oil prices. Shell (SHEL.L), opens new tab and BP (BP.L), opens new tab rose 1.6% and 1%, respectively. The healthcare sector (.FTNMX201030), opens new tab rose 1%, while precious metal miners (.FTNMX551030), opens new tab advanced tracking higher gold prices with Fresnillo (FRES.L), opens new tab up 1.8%. In company news, Ithaca Energy (ITH.L), opens new tab shares fell 11.2% after its two largest shareholders sold about 3% stake in the company at a discount.