The FTSE 100 edged lower as renewed concerns over persistent inflation continued to weigh on investor sentiment across UK and global markets.
Bond yields climbed as traders reassessed the likelihood of near-term interest rate cuts, putting pressure on equity valuations in rate-sensitive sectors.
The moves reflect growing unease among investors that central banks, including the Bank of England, may hold borrowing costs higher for longer than previously expected.
Gilt yields rose in tandem with US Treasury yields, which have been climbing steadily as stronger-than-expected economic data complicates the outlook for monetary easing.
Higher bond yields typically reduce the appeal of equities by making fixed-income assets more attractive to investors seeking reliable returns.
The technology and real estate sectors, which are particularly sensitive to interest rate expectations, were among the hardest hit during the session.
UK inflation has remained stubbornly above target, giving policymakers limited room to pivot toward a more accommodative stance in the months ahead.
Consumer price pressures, driven in part by persistent services inflation, have continued to frustrate expectations of a decisive downward trend in headline figures.
Market participants are now closely watching upcoming economic data releases for further clues on the timing and pace of any future rate reductions.
Broader European markets also drifted lower in sympathy, as the inflation and yield dynamics affecting the UK were mirrored across the continent.
Trading volumes remained cautious as investors balanced ongoing macroeconomic uncertainty against relatively resilient corporate earnings from a number of major listed companies.
Analysts noted that until there is greater clarity on the inflation trajectory, equity markets are likely to face continued headwinds from the bond market.