The FTSE 100 suffered its biggest fall in more than two months as political turmoil in Italy hit banks such as Barclays, and as rising sovereign debt yields hit bond proxies including Severn Trent and United Utilities.

Dixons Carphone led the consumer-exposed stocks lower after cutting profit guidance to factor in increased investment costs in a shrinking UK electronics market. The warning pressured discount retailer B&M European a day before its full-year results.

Sector peer Dunelm held steady after Andy Harrison, its chairman, spent more than £500,000 buying shares.

IWG edged higher after another bidder emerged. The Regus office owner, which this month said it was being stalked by three private equity companies, rejected a cash offer from a consortium led by US property investor Prime Opportunities.

Stifel analysts speculated that the auction for IWG might also draw interest from SoftBank, whose $100bn Vision fund has invested in upstart rival WeWork.

Gold miner Centamin dropped on a downgrade to “neutral” from Goldman Sachs. Recent equipment shortages make it unlikely that Centamin can open an extension of its Sukari mine in Egypt by next year, it said.

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