Pound reaches two-week high
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U.K. stocks tilted lower Thursday as investors await the results from a closely watched parliamentary election, with a Conservative Party majority at stake.
The FTSE 100 fell 0.2% to 7,465.30, giving up earlier gains. Financial, basic material and utility shares were higher, but consumer-related and industrial shares were in the red.
Meanwhile, the more domestically focused and midcap FTSE 250 index was down 0.2% at 19,663.20.
Read:U.K. election--these are the stocks and sectors to watch once the result is in (http://www.marketwatch.com/story/watch-for-a-shake-up-among-uk-stocks-after-thursdays-election-2017-06-06)
U.K. stocks were little changed in afternoon trade after the European Central Bank left interest rates unchanged, as expected, but removed language from its policy statement indicating rates could go lower in the future. (http://www.marketwatch.com/story/ecb-leaves-policy-unchanged-drops-reference-to-lower-rates-2017-06-08)
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U.K. investors watch ECB policy decisions in part as the European Union is a top trading partner for Britain.
See:Why ECB can take only '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)
Election Day: Polls in the U.K. opened at 7 a.m. London time, or 2 a.m. Eastern Time, in a general election called out of cycle (http://www.marketwatch.com/story/whats-a-snap-election-and-why-does-uk-prime-minister-theresa-may-want-one-2017-04-18) by U.K. Prime Minister Theresa May in a bid to gain more seats for her Conservative Party, and so strengthen her hand in Brexit negotiations (http://www.marketwatch.com/story/uk-adds-another-layer-of-complexity-analysts-react-to-surprise-snap-election-call-2017-04-18).
The final round of opinion polls has provided little clarity about the outcome of the election, with the Conservative lead ranging from double-digits to "virtually nonexistent," said Ian Williams, economist and strategist at Peel Hunt.
"The level of turnout, especially among younger voters in marginal constituencies, may well prove decisive," Williams said in a note.
With 650 seats at stake, a majority is at least 326 seats. The Conservatives currently have 330 seats and, with support, a working parliamentary majority of 17.
"The spread quotes have settled down in recent days, at levels implying a majority of around 80 seats, which feels consistent with where sterling is now trading," Williams said. "Such a result should prompt an initial, probably modest, relative rebound in the more UK-exposed mid & small cap groups."
The pound was buying $1.2941, and earlier traded around a two-week high at $1.2978. Sterling late Wednesday bought $1.2912 late Wednesday. A stronger pound can eat into sales of multinational companies listed on the FTSE 100.
Analysts at ING have said a majority of at least 50 seats for the Conservatives would be needed for sterling to take any meaningful steps higher. (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)
(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)Read:When do we know who won the U.K. election? (http://www.marketwatch.com/story/when-is-the-uk-election-and-when-do-we-know-who-won-2017-06-01)
Mining cheer: Shares of miners were mostly higher after the release of data showing Chinese exports in May rose a more-than-expected 8.7% (http://www.marketwatch.com/story/chinas-exports-rise-for-third-straight-month-2017-06-08) from a year earlier, suggesting resilient global demand for goods from the world's second-largest economy. China is a major buyer of industrial and precious metals.
In the group, iron ore producer Rio Tinto PLC (RIO) (RIO) added 0.7% and BHP Billiton PLC (BLT.LN) (BHP.AU) was up 0.8%. Anglo American PLC (AAL.LN) rose 1.1% but Randgold Resources Ltd. (RRS.LN) fell 1.2% as gold prices declined.
Read:BHP Billiton's board is in hedge fund's crosshairs (http://www.marketwatch.com/story/bhp-billitons-board-is-in-hedge-funds-crosshairs-2017-06-07)
Other movers: Elsewhere on the FTSE 100, shares of Kingfisher PLC (KGF.LN) fell 1.8%, after Investec recommended selling shares in the DIY retailer.
A few FTSE 100 constituents were trading without dividend rights Thursday. Advertising firm WPP PLC (WPP.LN) pared its gain to 0.1% as did Associated British Foods PLC (ABF.LN). Vodafone Group PLC (VOD.LN) (VOD.LN) turned down 0.6%. Chemicals company Johnson Matthey PLC (JMAT.LN) reversed course and fell 0.3%.
(END) Dow Jones Newswires
June 08, 2017 08:17 ET (12:17 GMT)