London Stocks Fall As UK Heads To Polls, Bucking Uptrend Across Europe

The British capital's FTSE 100 index turned flat heading into midday, wiping out initial gains
The British capital's FTSE 100 index turned flat heading into midday, wiping out initial gains

The London stock market stalled on Thursday, bucking an upwards trend across Europe, with investors nervous as Britons vote in a snap general election. Sentiment was also clouded before an interest rate decision in the Eurozone - and crucial testimony from sacked FBI chief James Comey in the United States. "Super Thursday is finally here and traders are ready for a volatile day ... with important events in Europe and the United States," said analyst Konstantinos Anthis at ADS Securities.

The British capital's FTSE 100 index turned flat heading into midday, wiping out initial gains, while the pound edged lower against the dollar with voting underway.

In the Eurozone, Frankfurt and Paris rebounded somewhat before a hotly-anticipated European Central Bank policy announcement. All eyes will be on ECB chief Mario Draghi to see whether he signals an exit from its easy-money policy.

Most observers predict however that the bank's 60-billion-euro ($67.4 billion) monthly bond purchases will continue and interest rates will remain at historic lows.

Draghi focus

"Attention today should be focused on Draghi's press conference and the UK general election," NFS Macro analyst Nick Stamenkovic told AFP.

Britain's 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," Mr Stamenkovic added.

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

The election is Ms May's first since taking office in July last year, after Britons voted by 52 per cent 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 Mr Comey's evidence to a congressional committee, which could be damaging to US President Donald Trump and his economy-boosting agenda.

Mr Comey said Wednesday that Mr 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, Mr Comey said Mr 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.

"I hope you can see your way clear to letting this go, to letting Flynn go. He is a good guy," Mr Comey quoted Mr Trump as telling him on February 14 as they sat alone together in the Oval Office, according to his testimony.

Oanda analyst Craig Erlam added: "Based on the text of Comey's prepared testimony, it would seem that markets are not expecting anything too shocking, despite there being a reference to Trump urging him to drop the investigation into Flynn."

Around 1130 GMT, London shares were flat with FTSE 100 at 7,477.17 points. CAC 40 was 0.5 per cent at 5,289.01, DAX 30 was up 0.5 per cent at 12,736.39, and EURO STOXX 50 was trading at a gain of 0.7 per cent at 3,572.82.