Bonds selloff ripples into currencies, stocks
Shell falls after cutting Q4 LNG production outlook
FTSE 100 flat, FTSE 250 down 2

Jan 8 Reuters Locallyfocused British stocks were slammed on Wednesday alongside sterling, while benchmark UK gilt yields soared as investors grappled with the prospects of higher interest rates and stubborn inflation.

The domesticallyfocused FTSE 250 midcap index fell nearly 2 to a fivemonth low.

The bluechip FTSE 100 was broadly flat, cushioned by a 1 drop in sterling that helped international firms on the index that draw a major portion of their revenues overseas.

A selloff in some of the world39;s biggest government bond markets appeared more pronounced in UK gilts, fanning worries about the impact of higher borrowing costs on the British government39;s already shaky finances.

Thirtyyear gilt yields hit their highest since 1998 at 5.383, while 10year yields rose as high as 4.821 to levels last seen in 2008.

It39;s somewhat odd that bond yields have risen to new highs so long after interest rates have peaked, which suggests markets were complacent about inflation and overly confident that the Bank of England would cut rates sharply, said Laith Khalaf, head of investment analysis at AJ Bell.

Gilt yields have risen in recent weeks as most investors now expect the Bank of England to cut rates by only about half a percentage point this year, while inflation looks likely to hover above the central bank39;s 2 target.

Utilities, often…