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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 35.33 points to 6,486.93, while the FTSE 250 sank 374.05 points, or 2.3%, to 15,742.65. 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, dropping 0.8% against the dollar to $1.3177 and down 0.9% against the euro to €1.1814. The pound was down sharply, falling back to a 31 year-low against the dollar at $1.3122.
Analysts are waiting for the Bank of England's latest Financial Stability Report, due out later. The Bank is expected to relax capital requirement rules for banks following the referendum result. 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 gloomProperty gloom
Among property shares, housebuilder Persimmon fell 6% despite it reporting a rise in half-year revenues. 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 6.2% while Land Securities dropped 5.4%. 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 last time Standard Life stopped investors taking their money out of the fund was during the 2008 financial crisis.
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."