London equities experienced a decline on Thursday as investors adopted a cautious approach following indications from top central bankers that further interest rate hikes may be necessary.

However, the losses were limited by the strong performance of outsourcing firm Serco. The FTSE 100, representing blue-chip stocks, fell by 0.2%, while the domestically-focused FTSE 250 midcap index experienced a 0.5% decrease.

Global central banks reiterated their commitment to combating inflation on Wednesday, warning that additional rate increases might be required. This development influenced investor sentiment towards European equities, as noted by Alan Kinnaird, the business development manager at Walker Crips Investment Management, who mentioned that the hawkish comments from central banks would likely dampen investor appetite in the near future.

Shares of Serco Group saw a significant jump of 10% as the British company raised its full-year profit and revenue forecasts. UK banks also experienced a modest 0.3% increase, with Citigroup raising its price targets for several banks, including HSBC and Barclays.

On the other hand, Burberry Group witnessed a decline of 2.6% as the luxury brand's shares traded ex-dividend. The broader personal goods sector also faced a 2.2% decrease. Discount retailer B&M reported a 13.5% rise in revenue for the first quarter, but its shares slipped 7% due to trading ex-dividend.

Meanwhile, De La Rue, the banknote printer, saw a rise of 9% after retaining its forecast for annual adjusted profit. Cineworld Group, a cinema chain operator, experienced a 10% drop following the approval of its debt restructuring plan by a U.S. court. Moonpig Group, an online greetings card company, climbed 6.2% as it reported higher annual profit.

Although the FTSE 100 is expected to post modest gains for the month, it is on track to record a quarterly decline after two consecutive quarters of growth. Inflationary pressures and high interest rates have impacted equities negatively.

Investors will be keeping an eye on Silvana Tenreyro, a member of the Bank of England's monetary policy committee, who is scheduled to speak later in the day. Additionally, the UK May mortgage approvals data will be a point of interest for market participants. Photo by Diliff, Wikimedia commons.