FTSE 100 edges lower as financials drag; ECB meeting in focus

On the other hand, the chemicals index rose 1.3% to lead sectoral gains, while oil and gas shares gained 0.8% on the back of higher crude prices amid escalations in the Middle East crisis. Markets expect the European Central Bank (ECB) to maintain borrowing costs in its monetary policy decision at 1215 GMT, though it could signal an interest rate cut as soon as June, fueled by a recent downturn in Eurozone inflation.

UK's FTSE 100 edged lower on Thursday as a sell-off in financials weighed, while investors moved their focus from hotter-than-expected U.S. inflation data to the European Central Bank's interest rate decision later in the day.

The internationally-exposed FTSE 100 index slipped 0.1% as of 0823 GMT. The more domestic-oriented FTSE 250 was flat. Insurer Aviva slipped 5.5% to the bottom of FTSE 100, trading ex-dividend. The broader life insurance index fell 2.0%, leading sectoral declines.

Lloyds Banking Group also lost 3.7% as the lender traded ex-dividend, weighing the banks index down by 1.0%. On the other hand, the chemicals index rose 1.3% to lead sectoral gains, while oil and gas shares gained 0.8% on the back of higher crude prices amid escalations in the Middle East crisis.

Markets expect the European Central Bank (ECB) to maintain borrowing costs in its monetary policy decision at 1215 GMT, though it could signal an interest rate cut as soon as June, fueled by a recent downturn in Eurozone inflation. "Given the weakness that we are seeing in European economies, which is also the case in the UK, the ECB should give us a pointer that perhaps we will see a June rate cut," said Axel Rudolph, senior market analyst at online trading platform IG.

In corporate updates, Darktrace surged 7.2% after the cybersecurity company raised its annual revenue and margin forecasts for the third time this year. Lok'NStore jumped 18.0% after rival Shurgard agreed to acquire the self-storage company in a deal valued at 378 million pounds ($474 million).

AstraZeneca gained 1.2%, lifting the overall pharma sector by 0.7% after the drugmaker said it intends to increase annual dividend for 2024, betting on strong performance and cash generation.

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