A shock British
election result that left no single party with a clear claim to power
hit sterling on Friday and left the dollar on course for its best week
in over a month, while world shares headed towards their first weekly
fall since April.
The
outcome of the snap poll, called by Prime Minister Theresa May to try
to bolster her parliamentary majority, was a blow to investors who had
already weathered major risk events in the United States and Europe the
previous day.
But the wider reaction suggested a more limited impact than after last year's Brexit vote, which triggered a prolonged decline in the pound and unsettled other assets.
Bets that another drop in sterling would flatter international firms' profits pushed London's FTSE .FTSE up around 0.6 percent, while the Frankfurt .GDAXI, Paris .FCHI and Milan .FTMIB bourses made almost as much.
With the majority of seats counted, May's Conservatives had no way to win an outright majority in parliament.
That raised fears the political turmoil could delay and confound talks on leaving the European Union, which are due to start in less than two weeks, and the pound shed over 2 percent against the dollar.
It dropped as low as $1.2636 GBP= and 88.6 pence per euro EURGBP= -- two- and six-month troughs -- in early London trading, before clawing back some ground. Yields on 10-year gilts GB10YT=TWEB fell 3 basis points to 1.00 percent.
The damage was limited elsewhere, with E-mini futures for the S&P 500 ESc1 edging up 0.1 percent.
Japan's Nikkei .N225 added 0.5 percent and MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was closing all but flat.
The rot for sterling had started when an exit poll showed the ruling Conservatives could fail to win a clear majority when markets had expected a handy victory.
Ahead of the final results, forecasts showed the party would hold a reduced 319 seats in the 650-member parliament, following a big swing to the left-leaning opposition Labour Party. For the latest updates, click
Betting agencies were already taking wagers on whether May would still have her job by the end of the day.
But the wider reaction suggested a more limited impact than after last year's Brexit vote, which triggered a prolonged decline in the pound and unsettled other assets.
Bets that another drop in sterling would flatter international firms' profits pushed London's FTSE .FTSE up around 0.6 percent, while the Frankfurt .GDAXI, Paris .FCHI and Milan .FTMIB bourses made almost as much.
With the majority of seats counted, May's Conservatives had no way to win an outright majority in parliament.
That raised fears the political turmoil could delay and confound talks on leaving the European Union, which are due to start in less than two weeks, and the pound shed over 2 percent against the dollar.
It dropped as low as $1.2636 GBP= and 88.6 pence per euro EURGBP= -- two- and six-month troughs -- in early London trading, before clawing back some ground. Yields on 10-year gilts GB10YT=TWEB fell 3 basis points to 1.00 percent.
The damage was limited elsewhere, with E-mini futures for the S&P 500 ESc1 edging up 0.1 percent.
Japan's Nikkei .N225 added 0.5 percent and MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was closing all but flat.
The rot for sterling had started when an exit poll showed the ruling Conservatives could fail to win a clear majority when markets had expected a handy victory.
Ahead of the final results, forecasts showed the party would hold a reduced 319 seats in the 650-member parliament, following a big swing to the left-leaning opposition Labour Party. For the latest updates, click
Betting agencies were already taking wagers on whether May would still have her job by the end of the day.
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