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UK shares lower as investors remain edgy | UK shares lower as investors remain edgy |
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(Noon): The FTSE 100 slipped and the pound fell as markets remained on edge ahead of the UK's EU referendum. | |
By midday, the FTSE 100 index was down 46.82 points, or 0.8%, at 6,068.94. | |
Sterling dropped 0.6% against the dollar to $1.4169 and fell 0.9% against the euro to €1.2566. | |
In addition, the "volatility index" for the pound - a measure of investors' uncertainty - has hit levels approaching those of the financial crisis. | In addition, the "volatility index" for the pound - a measure of investors' uncertainty - has hit levels approaching those of the financial crisis. |
Polls at the weekend suggested the Leave campaign is ahead of the Remain team, and figures from betting exchange Betfair indicate the implied probability of the UK staying in the EU has fallen to 64%, down from 78% a week earlier. | Polls at the weekend suggested the Leave campaign is ahead of the Remain team, and figures from betting exchange Betfair indicate the implied probability of the UK staying in the EU has fallen to 64%, down from 78% a week earlier. |
Investors are also expected to remain cautious ahead of the US Federal Reserve's meeting later this week. | Investors are also expected to remain cautious ahead of the US Federal Reserve's meeting later this week. |
"Financial markets are in a clear risk-off mode once more this week," said Joshua Mahony, market analyst at IG. | "Financial markets are in a clear risk-off mode once more this week," said Joshua Mahony, market analyst at IG. |
"The Brexit-shaped shadow that looms over markets is also joined by an FOMC meeting this week, which while predictable by action, is less certain by tone. There is a high likeliness that at a time where risks are so high, market sentiment will continue to drive volatility for the next 10 days." | "The Brexit-shaped shadow that looms over markets is also joined by an FOMC meeting this week, which while predictable by action, is less certain by tone. There is a high likeliness that at a time where risks are so high, market sentiment will continue to drive volatility for the next 10 days." |
However, Deutsche Bank said a Leave vote would not necessarily hit UK equities that badly. | However, Deutsche Bank said a Leave vote would not necessarily hit UK equities that badly. |
"In the case of a Leave vote in the UK referendum... we expect UK equities to outperform the European market, given the likely GBP (British pound) depreciation in such a scenario as well as the market's defensive sector structure," analysts at the bank said in a note. | "In the case of a Leave vote in the UK referendum... we expect UK equities to outperform the European market, given the likely GBP (British pound) depreciation in such a scenario as well as the market's defensive sector structure," analysts at the bank said in a note. |
Among individual stocks, shares in BT Group fell 1,6% after analysts at Berenberg cut its price target for the telecoms and broadcasting group. | |
In the FTSE 250, G4S shares dropped nearly 6% after it emerged that the gunman behind the massacre in a Florida nightclub was one of its employees. |