London stocks slide as Britons head to polls

GMT 11:36 2015 Thursday ,07 May

Arab Today, arab today London stocks slide as Britons head to polls

London Stock Exchange
London - AFP

The London stock market sank Thursday as Britons voted in a general election that is shrouded in uncertainty and is set to be the closest in a generation, dealers said.

The capital's FTSE 100 index of leading companies slumped 1.50 percent to 6,829.80 points in late morning deals.

In the eurozone, Frankfurt's DAX 30 index slid 0.90 percent to 11,247 points and the Paris CAC 40 lost 1.40 percent to 4,911.80 compared with Wednesday's close, with jitters over Greece also driving down stocks.

Madrid stocks lost 1.53 percent, although Spain enjoyed negative interest rates on its medium-term debt for the first time since a crippling economic crisis.

In Britain, polls opened at 7:00 am (0600GMT) with voters deciding between Prime Minister David Cameron's centre-right Conservatives and Ed Miliband's centre-left Labour.

"Judging from recent opinion polls, today’s general election is likely to be the closest for at least a generation," said analyst Nick Stamenkovic at RIA Capital Markets.

"Conservatives and the Labour party are neck and neck with neither party likely to achieve an overall majority."

While the leaders of both main parties insist they can win a clear majority in the 650-seat House of Commons, they will almost certainly have to work with smaller parties to form a new government.

If neither the Conservatives nor Labour win a clear majority, they will start days and possibly weeks of negotiations to try and build a bloc of about 326 seats.

- Dead heat in polls -

The last three polls released on Wednesday showed a dead heat between the two main parties, tied at 34 percent, 35 percent and 31.4 percent.

"Equity markets are pulling back this morning with (the) FTSE lagging most in anticipation of the UK's general election," said analyst Mike van Dulken at trading firm Accendo Markets.

He added that the election was "a cause for concern, as markets hazard guesses as to what kind of coalition we will inevitably end up with, how complicated it will be and how long it will take to put together".

In Thursday morning foreign exchange deals in London, the pound sank on election jitters.

The euro jumped to a three-month high at 74.83 pence, compared with 74.43 pence Wednesday, while the pound also slid to $1.5236 from $1.5247.

"You do not need a particularly long memory to recall the pound's nosedive after the 2010 election, when it took the Conservatives and Liberal Democrats an agonising five days to form the coalition government," said Currencies Direct analyst Phil McHugh.

- Five days of uncertainty? -

"Political uncertainty is never good news for a currency, and with more minority parties at the negotiating table this year we should be bracing ourselves for more than five days of uncertainty," added McHugh.

"The poll result -- or lack of one -- should be known early Friday morning."

The European single currency meanwhile rose to $1.1370 from $1.1348 late in New York on Wednesday, as the greenback was hit by weak US economic data.

Asian shares also fell Thursday after Wall Street dropped on weaker-than-expected US economic data and a warning from Federal Reserve Chair Janet Yellen that stock valuations were "quite high".

Tokyo stocks fell 1.23 percent after a three-day holiday, Sydney fell for the third straight day, and mainland Chinese markets were also lower on worries regulators may tighten control over margin trading.

Fresh US data was relatively weak. Non-farm productivity fell 1.9 percent in the first quarter year-on-year in the second straight quarterly fall.

Payroll firm ADP meanwhile reported the US added just 169,000 private-sector jobs in April, the second month in a row under 200,000, as the oil sector downturn continued to pinch the labour market.

The figures came ahead of Friday's highly anticipated Labor Department jobs report.

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