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* British Airways owner rises despite reporting annual loss
* Miners, oil producers lead declines
* FTSE 100 down -2.5%, FTSE 250 off 1.4% (Updates to close)
By Shivani Kumaresan and Amal S
Feb 26 (Reuters) - The export-heavy FTSE 100 marked its weakest session since late-October on Friday, snapping three straight weeks of gains as a broader sell-off in bonds spread to global equities.
The FTSE 100 .FTSE slipped 2.5%, tracking losses in Europe and Asia as surging bond yields sparked fears of higher interest rates despite assurances to the contrary by the world's major central banks. MKTS/GLOB
Mining stocks including Rio Tinto RIO.L , Anglo American AAL.L , and BHP BHPB.L , were the biggest drags on the index, while oil heavyweights BP BP.L and Royal Dutch Shell RDSa.L fell tracking a fall in oil and metal prices. O/R MET/L
"As the UK 10-year Gilt yield reaches 0.75%, the UK's borrowing costs look like they are about to break a 25-year downtrend at a particularly inconvenient time, something that will have Boris Johnson and Rishi Sunak a little on edge," said Russ Mould, director at AJ Bell Investment.
The FTSE 100 lost its momentum through February, gaining only 1.2% for the month as gains in major mining, energy and banking stocks on expectations of a vaccine-led economic recovery were offset by concerns over a quicker-than-expected spike in inflation causing a tightening of monetary policy.
Bank of England Chief Economist Andy Haldane warned that an inflationary "tiger" had woken up and could prove difficult to tame as the economy recovers from the COVID-19 pandemic, potentially requiring the BoE to take action. finance minister Rishi Sunak, who is trying to steer the economy through a third coronavirus lockdown before an expected recovery later this year, looks set to rely heavily on the debt markets again when he announces a budget plan on March 3. domestically focused mid-cap FTSE 250 index .FTMC fell 1.4%, led by declines in industrials and consumer discretionary stocks.
British Airways owner IAG ICAG.L gained around 3% despite marking a 7.43 billion euro ($9 billion) loss last year and warning it could not say when normal flying conditions would return.