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Investor fears over Brexit cause slump in London market

Published 16/06/2016

The FTSE 100 Index was 39.4 points lower at 5928.4
The FTSE 100 Index was 39.4 points lower at 5928.4

Brexit fears dragged the London market to a four-month low at one stage, as investor jitters over the referendum vote showed no sign of abating.

London's top flight index touched 5,899.97 early in the session, as concerns over the outcome of the European referendum and the plunging oil price weighed on stocks.

But the FTSE 100 Index staged a late rally, finishing 16.3 points down at 5,950.5, thanks to a surge from precious metal stocks.

Gold miner Rangold Resources soared more than 4% higher, while silver miner Fresnillo stepped up just shy of 1%.

Royal Dutch Shell and BP were up 13p to 1735p and 5.4p to 364.9p respectively, as the oil giants shrugged off a sharp drop in Brent crude, which slipped for the sixth straight session.

The oil price was also being hit by Brexit uncertainty, causing it to sink 3.4% to 47.3 US dollars a barrel.

The London market was feeling nervous about comments coming from across the Atlantic after the Federal Reserve pushed a US interest rate rise into the distant future amid concerns over a recent slump in the American jobs market and uncertainty over Britain's vote on Europe.

Sterling, which hit two-month lows against the US dollar and euro on Monday, was also on the back foot, with little sign of the referendum's Remain vote gaining strength.

The pound was down 0.5% against the US dollar at 1.411 as t he Bank of England announced that its Monetary Policy Committee had kept interest rates on hold at 0.5% and warned it is ''increasingly probable'' that Brexit would send the pound plunging.

It added that referendum uncertainty is already hitting the housing market as Britons put spending decisions on hold.

Policymakers sounded the alarm once more over the impact on the economy of a vote to leave the EU as they said uncertainty caused by the referendum was seeing delays in ''major economic decisions'' among households and in the corporate sector.

The pound was up 0.3% against the euro at 1.263.

In stocks, discount retailer Poundland was on the up despite posting a slump in annual profits after a "challenging but transformative" year.

It comes after South African retail group Steinhoff - which owns UK furniture firms Harveys and Bensons For Beds - revealed late on Wednesday that it had bought 61.2 million ordinary shares in the budget retailer and confirmed any potential offer would be made in cash.

Annual results laid bare the group's sales woes as underlying pre-tax profits fell 13.5% to £37.8 million in the year to March 27.

Shares rose 2.5%, or 5p, to 205p.

Banking and mining stocks also felt the impact of the market slump, with Anglo American down 18.6p to 612.4p and Standard Chartered dropping 6.3p to 498.8p.

The biggest risers on the FTSE 100 were Rangold Resources up 315p to 6925p, Fresnillo up 21p to 1233p, BP up 5.4p to 364.9p, Glencore up 1.9p to 138.5p.

The biggest fallers were Ashtead Group down 38p to 960p, Mediclinic International down 32.5p to 853p, Severn Trent down 67p to 2124p, Anglo American down 18.6p to 612.4p.

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