FTSE up but pound back in the red as investors brace for Brexit

taking stock: The London skyline with the 'Gherkin' in the foreground and Canary Wharf in the background. London’s powerhouse financial sector finds itself at a critical juncture with Article 50 about to be triggered PICTURE: Chris Radburn/PA Wire

STERLING fell into the red on yesterday, reversing earlier gains ahead of the official trigger of Article 50.

The pound dropped 0.3 per cent versus the euro to 1.152, and fell more than 0.5 per cent against the dollar to 1.248 – slipping from morning highs of 1.258 – as investors braced for the start of Brexit negotiations.

The government will start setting the terms of its divorce after Theresa May formally notifies the European Union of its intention to leave the bloc today.

"The pound began to show some pre-Article 50 jitters as the day went on," Connor Campbell, a financial analyst at SpreadEx said yesterday, explaining that the event has reminded investors of the difficulties ahead.

"It is going to be interesting to see how sterling behaves on Wednesday; Article 50 isn't like a Fed meeting, where a surprise could be sprung.

"It is almost just a formality, if, admittedly, one that carries a rather nasty reminder about the years of volatility and insecurity investors can expect as the Brexit negotiations officially get under way."

However, the currency's decline buoyed the FTSE 100, which rose nearly 0.7 per cent or 49.92 points to 7,343.42 points.

Multinational stocks on the blue chip index tend to benefit when foreign currencies are stronger.

Across Europe, the French Cac 40 and German Dax rose nearly 0.6 per cent and 1.3 per cent, respectively

In oil markets, Brent crude prices rose 1.6 per cent to US$51.60 per barrel (£41.23) following news of a production blockage that was affecting Libyan supplies.

In UK stocks, Tesco shares ended the day up 1.25p at 191.2p amid news that it would take a £235 million hit after reaching an agreement with authorities over its accounting scandal that will see it make a hefty compensation payout to investors.

Wolseley shares jumped 247p to 5,130p Plumb Center owner announced plans to rename itself as Ferguson, and pull out of the Nordics where results have been under pressure.

Ladbrokes Coral shares fell 2.3p to 133p. It came as the bookmaker reported a £213.3m loss for 2016 after it was hit by the costs of its merger with Coral.

Shares in Aviva rose 10p to 533p amid reports that the insurance giant is looking to offload Friends Provident International (FPI) in a deal that could be worth up to US$750m (£596m).

Thomas Cook fell 3.45 to 85.9p despite news that the travel firm was seeing "early signs" of a recovery in Turkey and Egypt after terrorist attacks and political unrest hit demand.

Meanwhile, the AA soared 14.7p to 270.5p after reporting the first rise in membership in eight years, as digital investments helped stem a near decade of declines.

Redrow shares climbed 16p to 516p on news that the housebuilder had pulled out of the takeover tussle for rival Bovis Homes.

The biggest risers on the FTSE 100 were Wolseley up 247p to 5,130p, Standard Chartered up 29.4p to 752.4p, Pearson up 23p to 656p, and Rio Tinto up 88p to 3,220p.

The biggest fallers on the FTSE 100 were Associated British Foods down 38p to 2,612p, easyJet down 13.5p to 998.5p, Hammerson down 7p to 562p, and Intu Properties down 3p to 271.8p.


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