World Stocks Firm on Eve of British Referendum
Global stocks largely rose Wednesday and the pound clawed higher on the eve of Britain's closely fought referendum as traders eye the country voting to remain in the European Union.
London's FTSE 100 index was 0.5 percent up in mid afternoon deals, as the clock ticked down to the start of balloting to decide Britain's future in the EU and the future shape of the bloc.
With all eyes trained on the result due early Friday, Frankfurt was just over one percent higher and Paris gained slightly less, buoying U.S. stocks that also opened cautiously higher.
Asian stocks mainly held in positive territory, despite the head of the U.S. Federal Reserve Janet Yellen warning that a vote to leave, a so-called Brexit, could hammer world markets.
Yellen was set for a second day of congressional hearings Wednesday.
The "Remain" camp now has a razor-thin lead -- 51 percent versus 49 percent for "Leave", according to an average of polls compiled by What UK Thinks.
Financial markets have largely tracked the polls as the campaign goes down to the wire and now appear to place the "Remain" camp clearly in the lead.
Rebecca O'Keeffe, head of investment at online broker Interactive Investor, said equities had continued "pushing further forward" despite poll predictions still making the result "too close to call".
But she questioned whether investors may be proving too confident.
"With less than 24 hours before voting starts, markets are now pricing in virtually no risk of an exit vote, which begs the question as to whether the euphoria is being overdone and how much upside still exists for investors -- or whether this is irrational exuberance and investors are ignoring the risks?"
Britain, which is the world's fifth largest economy, will suffer a powerful blow to growth and jobs, corporate chiefs warn, if the country becomes the first state to defect from the EU in the bloc's 60-year history.
Following a three-day rally fueled by hopes the country will stay in the 28-nation bloc, analysts said traders were pausing to see what happens in Thursday's poll.
- Markets pause -
"Equity indices are mixed... having lost some of yesterday's bullish momentum," said Mike van Dulken, head of research at Accendo Markets.
"A pause is... to be expected as we creep ever closer to the UK's referendum result on Friday, polls continuing to suggest it is too close to call.
"Markets also have a tendency to hunker down into any major risk event, preferring to avoid leaving excessive risk on the table, especially when the outcome could be so ground-breaking -- politically, economically and of course for financial markets," he added in a note to clients.
In foreign exchange, the pound climbed on Wednesday to $1.4719, having hit a five-month peak at $1.4783 the previous day on expectations that Britain would stay in the EU.
"Several polls this week have seen an increase in 'Remain' votes, and consequently sterling has rallied," said Currencies Direct dealer Callum McGrouther.
- Key figures around 1345 GMT -
London - FTSE 100: UP 0.5 percent at 6,260.45 points
Frankfurt - DAX 30: UP 1.0 percent at 10,117.15
Paris - CAC 40: UP 0.9 percent at 4,404.66
EURO STOXX 50: UP 0.9 percent at 2,993.65
New York - DOW: UP 0.2 percent at 17,856.51
Tokyo - Nikkei 225: DOWN 0.6 percent at 16,065.72 (close)
Shanghai - Composite: UP 0.9 percent at 2,905.55 (close)
Hong Kong - Hang Seng: UP 0.6 percent at 20,795.12 (close)
Euro/dollar: UP at $1.1304 from $1.1259 late Tuesday
Pound/dollar: UP at $1.4719 from $1.4628
Dollar/yen: DOWN at 104.61 yen from 104.80 yen
Source: Agence France Presse
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