16.45: In a volatile day of currency trading, the pound slipped, revived and then slipped again after prime minister Theresa May admitted she did not have enough support to win a third vote on her EU withdrawal deal.
Having clawed back losses in the morning, sterling retreated to trade 0.26% down at $1.3173.
The FTSE 100 pared some of its losses but closed 21 points, or 0.3%, lower at 7,186.
Shares outside the blue-chip index, generallly viewed as more exposed to the domestic economy and therefore vulnerable to a no-deal Brexit, fared worse. The FTSE Mid-cap dropped 199 points or 1% to 18,799 and the FTSE Small Cap index shed 38 points or 0.7% to 5,415.
May told MPs she would continue to try and convince them to back her agreement at a vote later in the wkke. In the meantime the government would give the House of Commons time to hold indicative votes on alternatives, although she said she was 'sceptical'.
(13:50) Pound revives, FTSE slips as cabinet rates May’s chances
13.50: The pound has rebounded on reports prime minister Theresa May’s cabinet are ‘more positive’ about the chance of her getting her Brexit deal approved by parliament at the third attempt this week.
Sterling reversed earlier losses to trade slightly up at $1.3214 against the dollar.
She is due to make a speech on Brexit to MPs later today, followed by a debate on the next steps.
A stronger pound weighed on the FTSE 100, whose stocks rely on overseas markets for around three-quarters of their earnings. The blue-chip index extended its slide to 42 points, or 0.6%, to 7,164.
Despite falls across European markets on slowdown fears, the bloc’s largest economy Germany bucked sluggish data with upbeat business figures.
The Ifo survey showed business morale improved unexpectedly in March, which signalled the country’s economy was likely to pick up in coming months.
(11:33) Pound falls, pressure mounts on May to quit
The pound has fallen amid pressure on prime minster Theresa May to resign as she struggles to win support for her Brexit plan, while fears over a US recession continued to weigh on stock markets.
Sterling was down to $1.317 against the dollar, after a weekend of speculation as to whether May would be forced to step aside as she tried to muster MPs' support for her twice-defeated Brexit deal.
May has written to MPs, saying she will only bring her deal to third vote if there is ‘sufficient support’, with lawmakers holding a host of indicative votes. The prime minister has just three weeks to get a deal finalised, without which the UK could crash out of the EU on 12 April.
‘Over the weekend the Prime Minister managed to fend off yet another attempt at her removal but equally she doesn’t seem to have managed to bring any new MPs on board to back her Brexit plans,’ said City Index senior market analyst Fiona Cincotta. ‘At this rate another “meaningful vote” this week could leave the markets as deflated as they are Monday morning.’
The FTSE 100 fell 29 points, or 0.4%, to 7,179, shaken by growing fears of a recession in the US while weak manufacturing data in Europe added to global slowdown fears.
An inversion in US bond markets seen on Friday for the first time since 2007, as yields on three-year treasuries overtook those on 10-year US government debt, continued to spook investors.
The US Federal Reserve has signalled concerns about an economic slowdown and abandoned interest rate rises for the rest of the year.
‘We don’t care why the [yield] curve inverts but instead think that in a capitalist economy like the US, animal spirits - and with it economic growth - are very linked to the steepness of the curve,’ said Deutsche Bank’s Jim Reid.
FTSE 100-listed Baillie Gifford trust Scottish Mortgage (SMT) was among stocks in the red, with shares in James Anderson’s £7.3 billion fund down 1.1% to 488.2p.
Edinburgh Worldwide (EWI) was another Baillie Gifford trust knocked by slowdown jitters, with shares in the FTSE Small Cap trust down 3.2%. US recession fears weighed on Asian markets which dragged down Baillie Gifford’s Pacific Horizon (PHI) trust, down 3.5% to 321p.
The FTSE 250 was down 106 points, or 0.6%, to 18,892 with satellite company Inmarsat (ISAT) up 8.8% to 550.5p after a private equity consortium agreed to buy the business for £2.6 billion.
Convatec (CTEC) rose 4.7% to 140.5p, after the struggling medical devices maker poached Karim Bitar from animal genetics group Genus to be its new chief executive, replacing Paul Moraviec, who left following a profit warning in October.
‘Convatec desperately needs a new lease of life as it has been a serial disappointment for most of its time as a listed business,’ said AJ Bell investment director Russ Mould.
‘Having made an impressive start by qualifying for the FTSE 100 index mere weeks after its flotation in 2016, its shares have been in a falling trend since summer 2017.’