(Bloomberg) -- Nigerian investors are switching out of stocks to position for higher yields in the fixed-income market, with banks emerging as the worst-hit sector.

An index of the top 10 banking stocks extended its decline to a fourth day in Lagos Thursday, dropping 3% to a nine-week low. Guaranty Trust Bank Plc led declines in the sector, falling 5.1%, while Union Bank of Nigeria Plc slid 8%.

“The market is reacting to the increased yield in fixed-income,” Tunji Faniyi, a trader at Meristem Securities said by phone. “The high liquidity of the lenders makes them vulnerable to changes in market sentiment.”

A pick up in returns on Nigerian debt has arrived sooner than the second-half rebound that traders, including Faniyi, expected. The central bank last week raised the rates on its Open Market Operations securities targeted at foreign investors to boost dollar inflows. And the rate on 364-day treasury bills jumped in Wednesday’s auction to 4% from 1.5%.

“We expect that the rise would trigger bearish sentiment in the market as big and institutional investors scale down their portfolios to take positions in the fixed-income market,” Gbolahan Ologunro, an analyst at Codros Capital, said by phone.

Nigeria’s benchmark index gained 0.8% on the day, snapping a run of eight successive declines, buoyed by a 7% jump in the biggest stock, Dangote Cement Plc. Just seven of the 157 index members ended the session higher.

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