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London stocks, pound dip as Britons head to polls

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Voters arrive at a polling station set up in the garage of a private residence in Croydon, south London, on June 8, 2017, as Britain holds a general election. As polling stations across Britain open on Thursday, opinion polls show the outcome of the general election could be a lot tighter than had been predicted when Prime Minister Theresa May announced the vote six weeks ago. / AFP PHOTO / Ben STANSALL

The London stock market and pound slid on Thursday, with investors nervous as Britons vote in a snap general election.

Investors were also on their toes as the ECB hinted at the end of its easy monetary policy, describing a rosier outlook for the eurozone and dropping a long-standing commitment to cutting interest rates yet further if necessary, and as they waited for crucial testimony from sacked FBI chief James Comey in the United States.

“Super Thursday is finally here,” said analyst Konstantinos Anthis at ADS Securities, referring to key events on both sides of the Atlantic.

The British capital’s FTSE 100 index turned flat heading into midday, wiping out initial gains, and then slipped into loss. It was down 0.3 percent in afternoon trading.

In the eurozone, Frankfurt and Paris were mixed after the ECB decided, as expected, to keep its ultralow interest rates unchanged and said it would continue its 60-billion-euro ($67.4 billion) monthly bond purchases to December.

It said it saw fewer risks to the eurozone economy as it increased its growth forecasts while cutting those for inflation.

“The risks surrounding the euro area growth outlook are considered to be broadly balanced,” said ECB chief Mario Draghi, whereas the central bank had previously said they were on the downside.

The euro retreated against the dollar after the ECB’s announcement.

“The central bank made every effort to retain a relatively neutral stance overall, balancing any hawkish or dovish statement with something roughly equal and opposite,” said market analyst Craig Erlam at OANDA currency traders.

“The fact that it no longer expects interest rates to remain at present ‘or lower’ levels is a clear deliberate signal that policy makers are gradually becoming more hawkish and yet it also claimed that they could increase the asset purchase program or continue until the end of 2017, or beyond, if necessary,” he added.

– Pound vulnerable –
Meanwhile Britain’s Conservative Prime Minister Theresa May is still set to beat main opposition Labour leader Jeremy Corbyn, despite a recent narrowing in the opinion polls. Results are not due until early Friday.

Some traders remain anxious over the possibility of a hung parliament, in which the Conservatives would fall short of the 326 seats needed for a majority.

“The pound’s recent steady performance suggests a clear win for Theresa May is discounted,” Stamenkovic added.

“Indeed, the pound is vulnerable to a hung parliament or the outside risk of a Labour victory.”

While the pound dipped on Thursday, it was still holding onto gains made after May called the early election.

The election is May’s first since taking office in July last year, after Britons voted by 52 percent to leave the European Union.

The premier called the election three years early in a bid to strengthen her slender majority going into Brexit talks, which begin on June 19.

In Asia on Thursday, Shanghai and Hong Kong led most markets higher after Chinese trade data beat forecasts.

– Comey revelations? –
Investors remain on tenterhooks ahead of Comey’s evidence to a congressional committee, which could be damaging to US President Donald Trump and his economy-boosting agenda.

The Dow was flat as Wall Street opened for trading.

Comey said Wednesday that Trump had urged him to drop a probe into former national security advisor Michael Flynn, prompting fresh allegations that the US president tried to obstruct justice.

On the eve of his appearance on Capitol Hill, Comey said Trump had raised the sensitive FBI probe into Russia’s alleged meddling in the US election in multiple discussions, leaving him deeply uneasy over whether the president was attempting to interfere.

– Key figures around 1330 GMT –
London – FTSE 100: DOWN 0.3 percent at 7,459.55 points

Paris – CAC 40: DOWN 0.1 percent at 5,258.16

Frankfurt – DAX 30: UP 0.3 percent at 12,703.72

EURO STOXX 50: UP 0.3 percent at 3,558.67

New York – Dow: FLAT at 21,173.73

Tokyo – Nikkei 225: DOWN 0.4 percent at 19,909.26 (close)

Hong Kong – Hang Seng: UP 0.3 percent at 26,063.06 (close)

Shanghai – Composite: UP 0.3 percent at 3,150.33 (close)

Pound/dollar: DOWN at $1.2923 from $1.2962 at 2100 GMT on Wednesday

Euro/dollar: DOWN at $1.1220 from $1.1263

Dollar/yen: UP at 110.00 yen from 109.80 yen

Oil – Brent North Sea: DOWN 39 cents at $47.67 per barrel

Oil – West Texas Intermediate: DOWN 39 cents at $45.33



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