Markets Falter as Investors Eye UK Election, ECB, Comey
Most European and U.S. stock markets retreated Tuesday, two days before a British general election and an expected rise in U.S. interest rates.
Britons head to the polls on Thursday, which is also when the European Central Bank (ECB) will announce its latest interest rate decision, while the U.S. Fed is expected to announce a rise next week.
Thursday will also see testimony by former FBI chief James Comey, whom President Donald Trump fired last month amid a probe of his campaign's ties to Russia.
"There has been a clear shift into haven trades to protect against any fireworks following key events on Thursday," said market analyst Jasper Lawler at London Capital Group, noting that gold hit a 2017 high above $1,295 per ounce and the Japanese yen pushed below 110 to the U.S. dollar.
Paris's CAC 40 gave up 0.7 percent, while Frankfurt fell 1.0 percent as German investors returned from a long holiday weekend.
In New York, the Dow shed 0.2 percent in late morning trading.
While London's main FTSE 100 stock index ended the day flat, the FTSE 250 which has many more British companies shed nearly 1.1 percent amid recent tightening in opinion polls between Conservative Prime Minister Theresa May and main opposition Labor leader Jeremy Corbyn.
"Investors appear to be shunning UK domestic shares before the election," said Lawler.
- 'Closer than expected' -
"The UK parliamentary election on Thursday may turn out to be a closer race than expected just a few weeks ago," noted Richard Falkenhall, senior foreign exchange strategist at Swedish banking group SEB.
"While we believe that any outcome but a Tory majority would weaken the pound initially, it might in fact be the other way around over the longer term."
The pound slid back under the $1.29 level.
Asian equities also struggled as investors nervously await the week's key political events.
The crisis over Donald Trump's possible ties to Russia could come to the fore when Comey appears on Capitol Hill, a month after the president fired him midway through a probe into the allegations.
The Russia question, and the country's possible interference in November's U.S. elections, has hung over the tycoon's head since taking office -- leading to calls for his impeachment.
There are concerns on trading floors that Trump's economy-boosting agenda -- big infrastructure spending, tax cuts and deregulation -- could be derailed. Stimulus hopes helped drive a months-long global markets rally after his election.
Among major losers on the day in Europe was Swiss pharmaceutical giant Roche, its share price diving 5.5 percent after a major clinical trial of a new anti-cancer medicine cocktail showed only a modest gain in survival rates -- at a cost per patient of some $70,000.
Elsewhere, oil prices edged down after Monday's losses as dealers looked past a decision by Saudi Arabia, the United Arab Emirates and Egypt to severe ties with Qatar, citing its support for terrorism.
- Key figures around 1530 GMT -
New York - Dow: DOWN 0.2 percent at 21,149.80 points
London - FTSE 100: FLAT at 7,524.95 points (close)
Paris - CAC 40: DOWN 0.7 percent at 5,269.22 (close)
Frankfurt - DAX 30: DOWN 1.0 percent at 12,690.12 (close)
EURO STOXX 50: DOWN 0.8 percent at 3,552.44
Tokyo - Nikkei 225: DOWN 1.0 percent at 19,979.90 (close)
Hong Kong - Hang Seng: UP 0.5 percent at 25,997.14 (close)
Shanghai - Composite: UP 0.3 percent at 3,102.13 (close)
Pound/dollar: DOWN at $1.2888 from $1.2905 at 2100 GMT on Monday
Euro/dollar: UP at $1.1272 from $1.1254
Dollar/yen: DOWN at 109.32 yen from 110.47 yen
Oil - Brent North Sea: DOWN 22 cents at $49.25 per barrel
Oil - West Texas Intermediate: DOWN 21 cents at $47.19
Source: Agence France Presse
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