Sterling rally helps drag London stocks into negative territory

The internationally-focused FTSE 100 broke its six-day streak of gains, closing 0.5% lower.

London’s stocks slipped back of its recent highs as the pound reached a 10-month high against the US dollar (Dominic Lipinski/ PA) (PA Wire)

London’s stocks slipped back from recent highs as the pound reached a 10-month high against the US dollar.

The internationally-focused FTSE 100, of which many listed companies will be exposed to fluctuations in the dollar, closed in the red on Tuesday, breaking a six-day streak of gains.

Sterling bounced by nearly 1%, hitting a peak of 1.252 against the US dollar during the day.

The weakening dollar also helped push up the price of gold to near all-time highs, as investors put money into the metal that is typically seen as a safe haven.

It came as the Royal Mint recorded a 26% annual jump in the volume of gold investments last year amid wider market uncertainties.

The FTSE 100 closed 38.48 points lower, or 0.5%, to 7,634.52.

Michael Hewson, chief market analyst at CMC Markets UK, said: “The FTSE 100 got off to a good start, pushing briefly above the 7,700 level and to a three-week high before retreating after the pound pushed above 1.25 against the US dollar, and to its highest levels since June last year.

“Optimism over the UK economy has been improving in recent weeks, helping to drive the recent gains in sterling.

“However, today’s resilience in the pound does appear to be acting as a bit of a drag on the wider UK market, which has slipped into negative territory, with basic resources, energy and industrials acting as the main drags, giving back some of yesterday’s gains.”

It was a more positive session for stock markets elsewhere in Europe, with the German Dax increasing by 0.2% and the French Cac edging up by 0.07%.

Whereas trading got off to a cautious start in the US, with the S&P 500 down by 0.55% and Dow Jones 0.65% lower when European markets closed.

The pound eased back slightly by the late afternoo, but was still 0.65% higher against the US dollar to 1.2495, and up 0.2% against the euro to 1.141.

In company news, shares in over-50s specialist Saga tumbled after it revealed it took a £269 million goodwill impairment in its insurance business, pushing it deep into a loss.

The firm said a competitive motor insurance market and regulatory changes had hit both its home and car insurance businesses. Shares in Saga fell by 16.5% at close.

Rathbones announced it was merging with rival Investec Wealth & Investment UK in a move set to create the country’s “leading discretionary wealth manager”.

The deal, worth about £839 million, will create new opportunities for customers and lead to cost savings and efficiencies from the overlap of the two firms, they said.

Shares in Rathbones were up by 1.8% and shares in Investec were 1.6% higher at close.

Private equity firm Apollo Management made what it said was its fifth and final proposal to buy engineering firm John Wood Group for £1.66 billion.

Wood Group has rejected four bids from Apollo which it previously said were “unsolicited” and undervalue the group’s prospects. Shares in Wood Group dipped by 2.3%.

The biggest risers on the FTSE 100 were Fresnillo, up 21.4p to 770.4p, Haleon, up 8.35p to 331p, Glencore, up 7.55p to 460.05p, London Stock Exchange Group, up 11p to 7,852p, and Admiral Group, up 27p to 2,078p.

The biggest fallers on the FTSE 100 were Ashtead Group, down 281p to 4,630p, Johnson Matthey, down 68p to 1,933p, Rolls-Royce, down 4.15p to 145.4p, Vodafone Group, down 1.98p to 87.48p, and British American Tobacco, down 61p to 2,811.5p.