Brexit Parliament debate puts hold on sterling rally
London's top-flight index dropped and sterling pulled back from session highs as a strengthening dollar and parliamentary debate on Brexit tempered the currency's relief rally.
It has been a volatile 24 hours for the pound, which jumped more than 1% against the US dollar in early trade after tumbling as low as 1.209 US dollars on Tuesday evening.
By Wednesday afternoon, the UK currency was around 0.8% higher at 1.22 US dollars despite losing almost 1% of its value during exchanges in the House of Commons on how Britain should leave the European Union. Against the euro, the pound was 1% higher at 1.107 euro.
The FTSE 100 Index closed down 0.7% or 46.9 points to 7024, after hitting a new intraday record of 7129.8 in the previous session.
The top tier's performance is closely linked to the pound. Sterling's gains tend to send the FTSE 100 lower as many of the listed multinational firms make their earnings overseas and benefit from a weak pound.
A strengthening US dollar knocked sterling's gains, but the pound was also impacted by further political jitters around Brexit.
Jasper Lawler, a market analyst at CMC Markets, noted that the pound went on a "400-point round trip in 12 hours."
He added: "Investors haven't appreciated operating in the dark over the UK's Brexit terms. The prospect of a bit more transparency from Theresa May could mark the beginning of more stable trading in the pound."
Since the EU referendum on June 23, the pound has lost nearly 18% of its value against the dollar.
Across Europe, the French Cac 40 and German Dax closed lower, down 0.4% and 0.5% respectively.
In oil markets, Brent crude prices were down 1.3% at 51.78 US dollars per barrel as the greenback strengthened, making the US dollar-denominated commodity more expensive in other currencies.
Investors also seemed to be losing hope that a potential output freeze by major oil producers could adequately tackle the global supply glut.
In UK stocks, s hares in British Airways-owner International Consolidated Airlines Group (IAG) rose following news Monarch had secured a £165 million cash injection from its owner, Greybull Capital, allowing it to retain its licence to operate.
It helped lift IAG shares up by 3.3p to 379.4p.
Away from the top tier, Premier Foods dropped more than 6% or 3.25p to 49p after warning that half-year results would be slightly lower than last year, due to dented demand for its grocery products. Sales in its grocery arm were down 9.5% in the three months to October.
The biggest risers on the FTSE 100 were Glencore up 14.3p to 236.2p, Direct Line Insurance Group up 11.6p to 362.6p, Aviva up 8.5p at 455.7p, and Centrica up 3.3p at 215.5p,
The biggest fallers on the FTSE 100 were Taylor Wimpey down 4p to 143.7p, Rolls-Royce down 20.5p to 754p, Dixons Carphone down 8.7p to 333.3p, and Barclays down 3.95p to 168.45p.