LONDON MARKETS: FTSE 100 Slides To 2-week Low As Pound, Tanking Oil Prices Bite

By Carla Mozee and Sara Sjolin, MarketWatch Features Dow Jones Newswires

Investors keep gaze fixed on U.K. vote

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U.K. stocks erased an earlier gain and turned lower on Wednesday, pressured by a stronger pound ahead of the country's general election and tanking oil prices.

The FTSE 100 index dropped 0.5% to 7,485.38, setting it on track for its lowest close since May 19, according to FactSet data.

The benchmark had traded with a gain of as much as 0.4% earlier in the day, but started turning lower as sterling fell.

Read:This is the worst that could happen to the pound in the U.K. election--and it's not Jeremy Corbyn (http://www.marketwatch.com/story/this-is-the-worst-that-could-happen-to-the-pound-in-the-uk-election-and-its-not-jeremy-corbyn-2017-06-07)

"The pound found some extra energy this afternoon, though it's not quite clear whether the currency is being driven higher by homegrown news or events elsewhere," said Connor Campbell, financial analyst at Spreadex, in a note.

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"Against both the dollar and the euro sterling jumped half a percent, suggesting that the election-jitters that have bothered the pound for the last fortnight or so have subsided," he added.

The pound bought $1.2960, up from $1.2912 late Tuesday in New York. Against the euro, the U.K. currency fetched EUR1.1515, compared with EUR1.1449 Tuesday.

Read:Euro slumps after report ECB will cut inflation outlook through 2019 (http://www.marketwatch.com/story/euro-slumps-after-report-ecb-will-cut-inflation-outlook-through-2019-2017-06-07)

A stronger pound tends to weigh on the FTSE, as about 75% of revenues for index are generated outside the U.K.

The London benchmark also closed with losses on the first two days of the week, in the run-up to three key events Thursday: The U.K. general election, the European Central Bank meeting and testimony by former Federal Bureau of Investigation Director James Comey.

Read:Draghi's ECB may take 'baby steps' toward ending ultraloose monetary policy (http://www.marketwatch.com/story/draghis-ecb-may-take-baby-steps-toward-ending-ultraloose-monetary-policy-2017-06-06)

"Markets will probably focus on how big of a majority Theresa May will manage to secure [in the U.K. vote], if the ECB will drop aspects of its dovish forward guidance, and on whether Comey will confirm that Trump attempted to influence an FBI investigation," said Charalambos Pissouros, senior analyst at IronFX, in a note.

See:U.K. election--the worst, best and most likely scenarios for stocks world-wide (http://www.marketwatch.com/story/uk-election-the-nightmare-best-case-and-most-likely-scenarios-for-stocks-worldwide-2017-06-01)

And check out:Watch for a shake-up among U.K. stocks after Thursday's election (http://www.marketwatch.com/story/watch-for-a-shake-up-among-uk-stocks-after-thursdays-election-2017-06-06)

Oil blues: Tanking oil prices also pulled U.K. stocks lower late in Wednesday's session. Crude plunged more than 4% after the U.S. Energy Information Administration said domestic oil supplies unexpectedly rose last week.

That pulled shares of BP PLC (BP.LN) (BP.LN) 1.4% lower and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) fell 0.7%.

Oil investors were also watching developments in Iran (http://www.marketwatch.com/story/shooting-injuries-reported-in-tehrans-parliament-reports-2017-06-07), where gunmen stormed the parliament in Tehran and started shooting at guards on Wednesday, according to media reports citing Iran's state media.

Stock movers: Home builder shares were higher after an update on U.K. house prices from Halifax. Prices in the three months to May were 3.3% higher than a year earlier, compared with a FactSet estimate of a 3% gain. Prices were down 0.2% on the preceding quarter.

Shares of Taylor Wimpey PLC (TW.LN) picked up 1.5%, Persimmon PLC (PSN.LN) rose 1.7%, and Barratt Developments (BDEV.LN) added 0.6%.

In the mining group, Anglo American PLC (AAL.LN) turned up by 0.8%. The company said Stuart Chambers will succeed John Parker as its chairman (http://www.marketwatch.com/story/anglo-american-names-stuart-chambers-as-chairman-2017-06-07).

(END) Dow Jones Newswires

June 07, 2017 11:24 ET (15:24 GMT)