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Pound Firms Awaiting Brexit Extension Date

The pound firmed against the dollar and euro on Wednesday as the European Union prepared to grant a further delay to Brexit, averting the prospect of Britain departing the bloc next week without a deal.

The prospect of another delay had initially hit sterling, which briefly dropped as low as $1.2841 on Wednesday in Asian trade before bouncing back to $1.2875 around 1030 GMT, up slightly from late in New York on Tuesday.

The pound is experiencing volatility on every Brexit twist and turn. Earlier this week the unit reached five-month highs above $1.30 on increasing hopes that a painful 'no-deal' Brexit divorce would be averted.

"The prospect of a 'no-deal' outcome appears to be miniscule, which explains why the pound has maintained most... gains," David Madden, analyst at CMC Markets UK, said Wednesday.

In stock market trading, London's benchmark FTSE 100 index was meanwhile up 0.5 percent, while eurozone equities were mixed.

The EU is set to grant another Brexit extension after British MPs on Tuesday rejected Prime Minister Boris Johnson's bid to force his divorce deal through parliament this week.

European Council President Donald Tusk has recommended that the EU's 27 other member states grant an extension, likely until the end of January.

In the meantime, the UK could hold a general election aimed at ending the Brexit deadlock, according to analysts. 

Elsewhere on Wednesday, Shanghai's main stocks index closed down 0.4 percent and Hong Kong lost 0.8 percent, with traders keeping tabs on reactions to a Financial Times report saying China was drawing up a plan to remove the city's beleaguered chief executive after nearly five months of pro-democracy unrest.

In commodities trading, oil prices slid after data indicated US stockpiles increased again last week, reinforcing worries about weak crude demand growth as the world economy slows.

On the corporate front, shares in French carmaker PSA jumped 2.5 percent to 24.65 euros after the company said healthy demand for upmarket models helped it resist a slowdown in the global automotive market.

The maker of Peugeot, Citroen, DS, Opel and Vauxhall vehicles announced a one-percent gain in third-quarter sales to 15.6 billion euros ($17.4 billion).

- Key figures around 1030 GMT -

Pound/dollar: UP at $1.2875 from $1.2872 at 2100 GMT

Euro/pound: DOWN at 86.35 pence from 86.43 pence

Euro/dollar: DOWN at $1.1116 from $1.1125 

Dollar/yen: DOWN at 108.43 yen from 108.49 yen

London - FTSE 100: UP 0.5 percent at 7,247.35 points

Paris - CAC 40: DOWN 0.3 percent at 5,641.26

Frankfurt - DAX 30: UP 0.3 percent at 12,794.87

EURO STOXX 50: DOWN 0.1 percent at 3,601.54

Tokyo - Nikkei 225: UP 0.3 percent at 22,625.38 (close)

Hong Kong - Hang Seng: DOWN 0.8 percent at 26,566.73 (close)

Shanghai - Composite: DOWN 0.4 percent at 2,941.62 (close)

New York - Dow: DOWN 0.2 percent at 26,788.10 (close)

Brent North Sea crude: DOWN 0.9 percent at $59.19 per barrel

West Texas Intermediate: DOWN 0.9 percent at $53.99 per barrel

© Agence France-Presse

Source: Agence France Presse


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