UK inflation still in doubledigit territory
Real estate stocks fall on ratehike concerns
Bank stocks gain, help cut losses
Fed decision awaited on Wednesday, BoE on Thursday
FTSE 100 down 0.2, FTSE 250 off 0.3

March 22 Reuters London39;s exporterheavy FTSE 100 fell on Wednesday, with real estate stocks leading the retreat, as hotterthanexpected UK inflation data raised fears of more interest rate hikes and boosted the pound.

The bluechip FTSE 100 index fell 0.2 after a near 2 bounce on Tuesday, with investors also waiting for the U.S. Federal Reserve39;s monetary policy decision later in the day.

The pound rose sharply against the dollar after Britain39;s consumer price index CPI inflation unexpectedly rose to 10.4 in February.

In the markets and also on the part of the Bank of England, there39;s a structural underestimation of inflation, said Stefan Koopman, a senior macro strategist at Rabobank in Amsterdam.

It39;s like a multiheaded hydra that pops up at various places and it39;s very hard to eradicate, Koopman said, referring to inflation.

The more domestically focussed FTSE 250 midcap index shed 0.3.

Recent turmoil in the banking sector after the collapse of two regional lenders in the U.S. and troubles at Credit Suisse have led traders to dial back their expectations for rate hikes.

Traders are now fully pricing in a 25basispoint interest rate hike by the Bank of England at its monetary policy meeting on Thursday.

Terminal rate expectations also…