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Pound and property shares head lower | Pound and property shares head lower |
(about 1 hour later) | |
Shares in property firms dragged the FTSE 100 lower after Standard Life Investments suspended trading in its UK property fund. | Shares in property firms dragged the FTSE 100 lower after Standard Life Investments suspended trading in its UK property fund. |
The company blamed the move on "exceptional market circumstances" following the EU referendum result. | The company blamed the move on "exceptional market circumstances" following the EU referendum result. |
The FTSE 100 index fell 13.55 points to 6,508.71, while the FTSE 250 sank 413.6 points, or 2.6%, to 15,703.13 points. | |
The pound was down sharply, falling back to a 31 year-low against the dollar at $1.3122. | |
Sterling was down more than 1% against the euro to €1.1787. | |
"Fears about the investment industry are leaching into the forex markets today, with sterling seeing heavy selling again after a few days of relative calm after the Brexit vote collapse," said Mark Priest from ETX Capital. | |
"Cable [the pound/dollar rate] is once again flirting with the $1.31 handle." | |
Property gloom | Property gloom |
Among property shares, housebuilder Persimmon fell 4.3% despite it reporting a rise in half-year revenues. | |
The company said it was "confident" about its prospects, and that it was too early to say how the UK's vote to leave the EU would affect the sector. | The company said it was "confident" about its prospects, and that it was too early to say how the UK's vote to leave the EU would affect the sector. |
But the news from Standard Life Investments cast a shadow across the entire property sector. Shares in Barratt Developments fell 4.7% while Land Securities dropped 4.1%. | |
Standard Life Investments said the number of investors asking to withdraw their money had increased following the EU referendum vote. | Standard Life Investments said the number of investors asking to withdraw their money had increased following the EU referendum vote. |
"The suspension was requested to protect the interests of all investors in the fund," it said in a statement. | "The suspension was requested to protect the interests of all investors in the fund," it said in a statement. |
The £2.9bn fund invests in a mixture of commercial real estate in the UK, including office blocks, shopping centres and warehouses. | The £2.9bn fund invests in a mixture of commercial real estate in the UK, including office blocks, shopping centres and warehouses. |
ETX Capital's Mark Priest said: "Investors are getting very nervous now as they fear Standard Life may not be the only fund that will close its doors. | |
"The last time we saw this kind of action was in the financial crisis." |