UPDATE 2-UK shares drop the most in 7 months on inflation woes; THG shines

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* Softbank leads $1 bln investment in Britain's THG, shares
surge
* NatWest slips as Britain lowers stake with $1.5 bln share
sale
* FTSE 100 down 2.6%, FTSE 250 off 2.3%

(Updates with market close)
By Shivani Kumaresan and Devik Jain
May 11 (Reuters) - British stocks clocked their worst day
since late October on Tuesday after a sudden drop in big U.S.
tech stocks over inflation concerns, while shares of THG Plc
eyed their best day on record on raising more than $1 billion in
new equity.
The blue-chip index .FTSE slid 2.6%, dragged down by
heavyweight banks .FTNMX301010 , life insurers .FTNMX303010
and miners .FTNMX551020 .
All the FTSE 100 constituents were trading in negative
territory.
The domestically focused mid-cap FTSE 250 index .FTMC
tripped 2.3%.
Travel and leisure .FTNMX405010 stocks slipped 4.0%, with
British Airways owner IAG ICAG.L falling the most, after it
launched an 800 million euro ($971.52 million) convertible bond
due in 2028 to strengthen its balance sheet. Globally, tech stocks took a beating as investors braced for
U.S. inflation data due on Wednesday, while keeping a close eye
on a host of Federal Reserve speakers this week to assess how
authorities are likely to respond to receding risks posed by the
coronavirus pandemic in some major economies. MKTS/GLOB
"With China and the U.S., the world's two largest economies,
showing signs of rising inflationary pressures, investors are
getting nervous," said Sophie Griffiths, Market Analyst, UK &
EMEA, at ONANDA.
"The overriding fear is that pandemic stimulus combined with
reopening economies will spark a sharp drive high in inflation,
forcing central banks to take action, tightening policy and
potentially slowing down economic recovery."
The FTSE 100 has gained about 7.2% year-to-date on optimism
that speedy COVID-19 vaccinations and constant policy support
from the government would drive a stronger economic recovery.
Beauty and lifestyle e-commerce company THG THG.L surged
11.7% after it raised more than $1 billion in new equity,
including $730 million from Japan's Softbank Group 9984.T .
NatWest NWG.L slid 3.5% after the UK government completed
a 1.1 billion pound ($1.55 billion) share sale at a discounted
price.