British benchmark had opened higher after weekend terror attack
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U.K. stocks stepped lower Monday, weighed down by a gain in the pound after a fresh poll signaled a double-digit lead for the governing Conservative Party as a general election nears.
A terror attack in London over the weekend has added to the uncertainty around Thursday's vote, but the Guardian/ICM poll out Monday suggested a change in government is unlikely.
The FTSE 100 fell 0.3% to 7,522.08, while sterling traded at $1.2909, up from $1.2891 late Friday in New York.
Earlier Monday, the FTSE had been edging higher, while the pound dropped.
The new survey (https://www.theguardian.com/uk-news/live/2017/jun/05/london-attack-isis-claims-responsibility-victims-named-live-updates?page=with:block-593519e8e4b0bdd87e2f36e2#block-593519e8e4b0bdd87e2f36e2), the Tories enjoy a 11-point lead over the Labour Party.
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"That's one of the biggest gaps that we've seen for a while," said Jasper Lawler, senior market analyst at London Capital Group. The poll looks like the dominant factor in U.K. markets on Monday, as oil's rally isn't helping the FTSE that much, Lawler added.
See:Oil prices higher after Saudi Arabia, other Middle East nations cut ties with Qatar (http://www.marketwatch.com/story/oil-prices-jump-after-saudi-arabia-other-middle-east-nations-cut-ties-with-qatar-2017-06-05)
The pound is "expected to remain volatile this week against the backdrop of the tragic weekend events in London and the flakiness of the polls in predicting what the outcome of Thursday's general election vote is likely to be, with the poll gaps varying between 1 and 12 points in favor of the Conservatives," said Michael Hewson, chief market analyst at CMC Markets UK, in a note.
The FTSE 100 tends to benefit from a falling pound, as the weaker currency boosts the foreign-denominated profits made by the index's multinational companies.
On Saturday, attackers with a van mowed down (http://www.marketwatch.com/story/london-bridge-nearby-market-hit-by-violent-attacks-at-least-1-dead-2017-06-03) pedestrians at London Bridge, then got out and began stabbing bystanders in nearby Borough Market. Police moved quickly and killed the attackers, but seven people died in the rampage and dozens were injured, 21 of them seriously.
Read:5 things to know about the U.K.'s general election next week (http://www.marketwatch.com/story/5-things-to-know-about-the-uk-general-election-next-week-2017-06-01)
And see: U.K. election--the worst, best and most-likely scenarios for stocks (http://www.marketwatch.com/story/uk-election-the-nightmare-best-case-and-most-likely-scenarios-for-stocks-worldwide-2017-06-01)
Police have arrested 12 people in raids (http://www.marketwatch.com/story/police-arrest-12-in-london-raids-after-terror-attack-2017-06-04) prompted by the attack, which interrupted the campaigning for the election and shook confidence in Britain's counterterrorism strategy (http://www.marketwatch.com/story/enough-is-enough-says-may-as-islamic-state-claims-credit-for-london-attack-2017-06-04).
Last week, the FTSE 100 -- which has been scoring record closes in recent sessions -- was flat for the week (http://www.marketwatch.com/story/ftse-100-on-track-for-all-time-high-as-us-records-lift-trading-mood-2017-06-02).
Individual movers: Shares in British Airways parent International Consolidated Airlines Group SA (IAG.LN) and easyJet PLC (EZJ.LN) traded 1.3% and 2.2% lower, respectively. Following terror attacks, airlines often have seen brief declines in reservations by passengers.
Over in the midcap FTSE 250, Ocado Group PLC (OCDO.LN) jumped 3.7% after the online grocer announced a deal with a regional European retailer who will use Ocado's software platform. Analysts noted the customer's name and other details haven't been released yet.
The overall FTSE 250 was down 0.3% at 19,941.93.
(END) Dow Jones Newswires
June 05, 2017 06:31 ET (10:31 GMT)