LONDON MARKETS: U.K. Stocks End Fractionally Lower As Polls Turn Up Election Nerves

By Sara Sjolin and Victor Reklaitis, MarketWatch Features Dow Jones Newswires

EasyJet reports upbeat traffic numbers

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U.K. stocks fell for a second straight day on Tuesday, albeit finishing just barely lower. Investors remained cautious ahead of the U.K. general election on Thursday, as polls point to an increasingly tight race.

The FTSE 100 index fell less than 0.1% to close at 7,524.95, slightly extending a 0.3% loss from Monday.

The almost-imperceptible pullback came as traders geared up for closely watched events later in the week. On Thursday, British voters head to the polls, the European Central Bank holds a policy meeting, and former Federal Bureau of Investigation Director James Comey will testify to a Senate panel (http://www.marketwatch.com/story/what-to-watch-when-james-comey-testifies-to-the-senate-on-thursday-2017-06-05) about alleged Russian interference in U.S. affairs.

"The U.K. election remains the standout event for most, with the outcome being so important for Brexit negotiations over the next couple of years," said Craig Erlam, senior market analyst at Oanda, in a note.

"The Conservative lead over Labour has collapsed, if the polls are to be believed, and it seems that the only thing that [U.K. Prime Minister] Theresa May currently has on her side now is time, with Labour still having a lot to do and only two days in which to achieve it," he added.

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A poll released late Monday by Survation put May's Conservative Party one point ahead of opposition Labour, down 16 points from a month ago. The Telegraph's poll tracker has the Tories ahead by 7 points, compared with a lead of more than 20 points in April.

Read:5 things to know about the U.K. general election this week (http://www.marketwatch.com/story/5-things-to-know-about-the-uk-general-election-next-week-2017-06-01)

The pound held up surprisingly well on Tuesday, shaking off the latest election jitters. Sterling bought $1.2895, down slightly from $1.2903 late Monday in New York, after an earlier gain faded.

"Whether this reflects a lack of faith in the polls or just those that point to a much tighter race isn't clear, but there doesn't appear to be much election risk being priced in, which in itself concerns me given what's happened previously," Erlam said.

The U.K. currency has in recent weeks traded at the mercy of opinion polls, sliding on signs May's Tories are losing voters' support.

Stock movers: Shares of Burberry Group PLC (BRBY.LN) (BRBY.LN) fell 3.7% after HSBC cut its rating on the luxury goods company to reduce from hold, according to media reports.

Budget airline EasyJet PLC (EZJ.LN) closed 0.4% lower, as it couldn't hold on to gains that came after it said passenger traffic rose 9.5% in May.

(END) Dow Jones Newswires

June 06, 2017 12:22 ET (16:22 GMT)