London stocks, pound steady after vote call triggers volatility


London's stock market weakened Wednesday, extending the previous session's sharp fall triggered by a rallying pound after Britain called a snap general election, a move lawmakers comfortably backed in a parliamentary vote.

The eurozone's main indices rebounded a little having also fallen heavily Tuesday, as investors look ahead to France's tight presidential election on Sunday, with Frankfurt and Paris making marginal gains at the close.

"Stocks are showing some resiliency in the face of heightened political uncertainty as the U.K. approved a surprise call for an election," said analysts at the Charles Schwab brokerage.

- 'Rather more subdued' -

"Following some turbulent trade yesterday the FTSE 100 and sterling are rather more subdued... as markets digest the potential impact of the unexpected snap election going forward," said David Cheetham, chief market analyst at XTB trading group.

British lawmakers overwhelmingly backed by 522 votes to 13 May's call to hold a snap election on June 8, before the country enters gruelling Brexit negotiations.

With (Other OTC: WWTH - news) the FTSE 100 featuring many multi-nationals earning in dollars, the stronger pound sent the index plummeting 2.5 percent on Tuesday -- a reversal of recent months which saw sharp gains for the London stock market thanks to a sterling slump.

The main London index slipped 0.5 percent to close at 7,114.36 points, just below its year-end level.

- 'Things may turn out differently' -

Fawad Razaqzada of said investors hoped an early British election would give May a stronger mandate on delivering the British withdrawal from the EU, although "in reality things might turn out differently, as US investors are starting to find out with regards to Donald Trump.

"After all, we still don?t know, for example, what type of a trade deal will the UK get from the EU."

In company news Wednesday, shares in luxury fashion brand Burberry slumped 6.8 percent to 1,585.56 pence as analysts predict a possible end to the group's recent run higher.

A trading update Wednesday showed the group's sales have grown thanks in large part to tourists visiting Britain taking advantage of sterling's drop.

"News of a snap UK election has seen a strong rally in the pound," broker Liberum said in a note to clients. "Should this continue towards polling day, Burberry's own forex-driven rally could disintegrate."

Earlier, Asian markets mostly turned lower on Tuesday's negative leads from Wall Street and Europe amid the political uncertainties linked to Britain and France.

As well as the bumpy British Brexit path, France is preparing for the first round of its presidential elections on Sunday, while Germany will vote later this year. The outcomes could have huge implications for the future of the eurozone.

Added to this is the face-off between the US and North Korea and the cooling of relations between Washington and Moscow over the Syria crisis.

- Haven assets shine -

Haven assets were holding up as investors fret over the global outlook. Gold is up more than two percent since Donald Trump ordered missile strikes on a Syrian airbase earlier this month, sparking fears of a possible conflict with Russia which is backing the Damascus regime.

There is a "growing wait-and-see mood due to such uncertainties as the French election and British snap poll", Okasan Online Securities chief strategist Yoshihiro Ito said in a commentary.

Elsewhere on Wednesday, oil prices slipped back despite OPEC's chief voicing confidence that production cuts agreed with crude producers outside the cartel will help to lift prices.

- Key figures at 1600 GMT -

London - FTSE 100: DOWN 0.5 percent at 7,114.36 points (close)

Frankfurt - DAX 30: UP 0.1 percent at 12,016.45 (close)

Paris - CAC 40: UP 0.3 percent at 5,003.73 (close)

EURO STOXX 50: UP 0.3 percent at 3,420.99

Tokyo - Nikkei 225: UP 0.1 percent at 18,432.20 (close)

Hong Kong - Hang Seng: DOWN 0.4 percent at 23,825.88 (close)

Shanghai - Composite: DOWN 0.8 percent at 3,170.69 (close)

New York - Dow: DOWN 0.1 percent at 20,504.38

Pound/dollar: DOWN at $1.2800 from $1.2840 at 2100 GMT Tuesday

Euro/pound: DOWN at 83.54 pence from 83.58 pence

Euro/dollar: DOWN at $1.0703 from $1.0732

Dollar/yen: UP at 109.07 from $108.45 yen

Oil - Brent North Sea: DOWN 76 cents at $54.13 per barrel

Oil - West Texas Intermediate: DOWN 65 cents at $52.22