London stocks rise as pound falls on Brexit chaos

LONDON: London’s stock market rose Thursday, with share prices of multinationals climbing as the pound dropped in the wake of more Brexit uncertainty.

The benchmark FTSE 100 index was up 0.5 percent nearing midday in London. In the eurozone, Frankfurt’s DAX 30 index advanced 0.4 percent and the Paris CAC 40 gained 0.1 percent.

British Prime Minister Theresa May will renew attempts to push through her Brexit plan, one day after she dramatically offered to quit to save her deal and MPs failed in their own bid to break the deadlock.

Wednesday’s events have weighed on the pound, while a weaker British currency boosts share values of companies listed in London who earn vast sums in dollars.

“With no clear way out of the Brexit labyrinth in sight, sterling struggled out of bed on Thursday, while the European indices nudged higher despite the overnight fears surrounding the global economy,” noted Connor Campbell, analyst at Spreadex trading group.

“The weary state of sterling, alongside a decent showing from its commodity stocks, allowed the FTSE to climb… enough to push the UK index to a near one-week peak.”

Earlier Thursday, Asian stock markets were gripped by volatility as investors grow increasingly worried about the state of the global economy, sending them rushing to haven assets and fuelling talk of possible recession.

Tokyo’s main stocks index sank 1.6 percent, with exporters hit by a jump in the haven yen currency, while Shanghai shed almost one percent.

Against this background, top Chinese and US negotiators held their latest round of trade talks in Beijing, with hopes the two economic superpowers can find a deal to end their long-running tariffs row.

After a stellar start to the year, equities are beginning to stumble with closely watched sovereign bond yields – key indicators of the state of the economy — flashing a warning.

The yields on government bonds – considered the most watertight investment in times of turmoil and uncertainty – have tumbled around the world while central banks are becoming more dovish on their outlooks.

This is most notable in the United States, where the Federal Reserve has lowered its rate hike expectations and 10-year Treasury bond yields are below those of three-month notes. The last time this happened was before the 2008 global financial crisis. – AFP