Two-week high for pound as US spooked by Trump poll gains
The pound hit a two-week high against the US dollar as investors were spooked by pre-election polls showing Republican presidential candidate Donald Trump in the lead just a week before Americans cast their votes.
Sterling rose as high as 0.6% to 1.231 against the greenback as the US dollar slumped. Against the euro, the pound was relatively flat at 1.107.
The FTSE 100 closed lower by 1%, or 71.7 points at 6845.42, as i nvestors backed away from riskier trades following news that Mr Trump was leading in a new national poll.
The ABC/Washington Post poll, which included Libertarian and Green Party candidates, showed Mr Trump at 46% and Democratic candidate Hillary Clinton at 45%.
Michael Hewson, chief market analyst at CMC markets, said: "Financial markets appear to be starting to pare some risk in the lead-up to next week's presidential vote, in the event that in circumstances that would probably have been unthinkable a week or so ago, that Donald Trump could win the US presidency."
He noted that investors were selling off stocks and the US dollar, and were instead piling into safe-haven assets like government bonds and gold, which neared a one-month high at 1305.73 US dollars per ounce.
The rising gold price helped pull Fresnillo shares to the top of the FTSE 100, up 62p at 1780p.
Across Europe, the French Cac 40 and German Dax closed lower, down 1.2% and 1.5%, respectively.
In oil markets, Brent crude prices slumped 2.4% to trade at 46.70 US dollars per barrel after the US Energy Information Administration (EIA) reported a record 14.4 million barrel rise in crude inventories in the week to October 28.
In UK stocks, Next shares rose 169p to 4979p. While the retailer reported a 5.9% drop in third quarter high street sales, trading improved since September with full-price sales rising 1.3% in October.
Shares in Persimmon rose 14p to 1751p after the house builder brushed aside Brexit fears and reported a 195 jump in its third quarter private sales rate compared to a year earlier.
Home building shares were also buoyed by the Markit/CIPS UK Construction purchasing managers' index (PMI), which showed a reading of 52.6 in October - the fastest growth in activity since March and up from 52.3 in September.
It helped drag up shares in sector peer Travis Perkins, which rose 13p to 1380p.
Away from the top tier index, JD Wetherspoon shares were down 22p at 866p. It comes after the company said like-for-like sales rose 3.5% in the 13 weeks to October 23, but warned it could be hit by higher wage costs, business rates and repairs.
G4S shares soared 22.7p to 242.8p after the world's biggest security firm reported double-digit earnings growth, a 5.7% jump in revenues from continued operations to £4.8 billion in the nine months to September, and celebrated new contracts worth £2 billion.
The news buoyed Serco Group shares, which closed higher by 2.8p at 137.5p.
The biggest risers on the FTSE 100 were Fresnillo up 62p at 1780p, Next up 169p at 4979p, eastJet up 27.5p at 968p and Randgold Resources up 190p at 7585p.
The biggest fallers on the FTSE 100 were Standard Chartered down 29.2p at 644.1p, Royal Dutch Shell A down 60.5p at 2054.5p, Royal Dutch Shell B down 62.5p at 2136.5p and Barclays down 4.65p at 182.05p.