Labour’s drubbing in the European election sent the pound tumbling today as pressure builds on Gordon Brown and his future as Prime Minister.
The pound was trading at $1.59 by 5pm after hitting a session low of $1.58 - a sharp fall from last week when sterling reached a seven-month high of $1.67.
The FTSE 100 index of leading stock also stayed in negative territory, dragged down by the mining sector and Lloyds which fell 5.1p, or 7.7 per cent, to 61.10p when it emerged that 23 per cent of its share deal had not been taken up, despite the banking group appearing to announce good news with its £2.3 billion bailout repayment to the government.
Rio Tinto was down 76p or 2.53 per cent to £29.25 on last week’s $15.2 billion rights issue — the third-largest capital raising ever by a British company.
Vedanta Resources fell 73p to £15.95, Eurasian Natural Resources was down 29p to 653.5p. Anglo American dropped 87p to £17.70.
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Rolls Royce was the top riser of the index, up 6.25p to 335.50p after parent company BMW announced the luxury carmarker’s sales had declined more slowly in May than in recent months and Goldman Sachs raised the company from “sell” to “neutral”.
Early falls on Wall Street kept London stocks in negative territory, with the FTSE 100 Index closing down 33.3 points at 4405.2.
However, US stocks rebounded heading toward the close of trade as financial shares surged. With less than 30 minutes left in the session, the Dow Jones industrial average gained 49.35 points, or 0.56 per cent, to 8,812.48.
The market was helped by gains for banking stocks as traders waited to hear which financial institutions will be allowed to repay government bailout funds. JP Morgan Chase was up 3 per cent.