By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Most U.K. stocks fell on Thursday, with oil firms and drug makers leading the decline, after rate-hike signals from U.S. Fed Chairwoman Janet Yellen rattled financial markets globally.

The FTSE 100 index fell 0.5% to close at 6,542.44, less than 20 points shy of its lowest closing level in six weeks.

The benchmark, however, came off session lows, with U.S. stocks recovering some ground lost in Wednesday's session, aided by a better-than-expected manufacturing-index reading for the Philadelphia area.

The London benchmark opened in negative territory after Yellen late Wednesday indicated a rate hike could come as soon as the spring of 2015. Speaking after the central bank's latest policy announcement, Yellen said the Fed may increase rates about six months after the asset-purchase tapering is done. The taper of the Fed's bond purchases is expected to end in October or November, putting the potential first rate hike on course for April or May of 2015.

The comments sent the greenback higher (DXY), which in turn added pressure on dollar-denominated commodities such as oil. Energy firms in London felt the pinch, with shares of BG Group PLC down 0.5%, BP PLC (BP) off 1.8% and Royal Dutch Shell PLC (RDSB) 0.6% lower.

Betting firms took a beating in London as well, extending declines from Wednesday when the U.K. government said it would raise taxes on betting terminals. Shares of William Hill PLC dropped 1.4%, while Ladbrokes PLC slid 4.5% outside the main benchmark.

The budget also impacted insurance firms as it included plans to scrap a rule that requires pension funds to be used to buy annuities. Resolution Ltd. said on Thursday that the impact of the proposal will be "far-reaching and the implications will take time to be fully understood." Resolution shares lost 5%, building on a 4.6% drop from Wednesday.

GlaxoSmithKline PLC (GSK) fell 1.6% in Thursday's action after the drug maker said its cancer drug MAGE-A3 suffered a setback and didn't meet its primary goal in a trial.

Another drug maker, AstraZeneca PLC (AZN) gave up 0.9%.

Outside the main index, shares of Mulberry Group PLC advanced 5.3% after the luxury-goods firm said Chief Executive Bruno Guillon will leave the helm with immediate effect. The resignation comes after the company issued a profit warning earlier this year.

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