LONDON MARKETS: FTSE 100 Slides, As Pound Rallies To 2-month High On Brexit Breakthrough Reports

U.K. said to have offered EUR50 billion divorce payment

U.K. stocks were sold off on Wednesday, pulled lower by a rally in the pound after reports the British government has offered to increase its Brexit divorce payment. The size of the exit bill has been a major stumbling block in moving negotiations with the European Union along.

What are markets doing: The FTSE 100 index slid 0.5% to 7,424.80, setting it on track for its biggest one-day loss since Nov. 15.

The pound jumped to $1.3417, from $1.3339 late Tuesday in New York, trading around its highest level since late September. Strength in sterling tends to weigh on the FTSE as around 75% of revenue for the index's components are generated outside the U.K.

Brexit breakthrough: The rally for sterling came after media reports ( said the U.K. government has offered Brussels a larger potential exit payment of up to 50 billion euros ($59.36 billion).

Prime Minister Theresa May in September suggested Britain would pay only EUR20 billion, but the EU said the amount would have to be increased to be able to move the withdrawal talks on to deal with trade and a potential transition period.

The U.K. government has not confirmed the reported new divorce offer.

Before the Brexit negotiations can move on to the next stage, the EU needs to see what it deems to be "sufficient progress" on three issues: the exit bill, EU citizens' rights and the Irish border. Even if London's payment offer gets accepted by Brussels, the two other stumbling blocks have yet to be settled. The question of whether the Irish border should be hard or soft, in particular, has been hotly debated recently.

However, the U.K.'s reported change of position on the exit bill was still seen as potentially breaking the negotiation deadlock and bringing the talks back on track.

"We expect U.K. PM Theresa May to present a formal offer on the Brexit bill, EU citizens rights, and the Irish border question at the upcoming 4 December dinner between May and EU Commission president Juncker," said Kallum Pickering, senior U.K. economist at Berenberg, in a note.

"We expect the offer to meet the EU's requirement for 'sufficient progress' on the Brexit divorce. If such progress is made, expect the U.K. and the EU to move negotiations on to potential transitional arrangements and post-Brexit trade at the 14-15 December EU Summit," he added.

U.K. 10-year gilt yields also moved on the news, rising 6 basis points to 1.316%, according to Tradeweb.

Stock movers: Companies with high international exposure were among the biggest movers on Wednesday.

Shares of British American Tobacco PLC (BATS.LN) (BATS.LN) dropped 1.8%, Imperial Brands PLC (IMBBY) (IMBBY) fell 1.6%, and Reckitt Benckiser Group PLC (RB.LN) (RB.LN) gave up 1.3%.

Outside the FTSE 100 index, shares of Cineworld Group PLC (CINE.LN) tanked 14% after news the movie theater operator has made a $3.1 billion offer ( for American counterpart Regal Entertainment Group (RGC) .

Britvic PLC (BVIC.LN) rallied 6.4% after the soft drinks maker said revenue rose 8% in fiscal 2017 (

(END) Dow Jones Newswires

November 29, 2017 04:30 ET (09:30 GMT)