LONDON, Dec 11 — Stock markets and the pound stumbled today after London and Brussels warned that a no-deal Brexit was now a strong possibility.

In afternoon trading, London stocks fell by 0.6 per cent, while Frankfurt gave up 1.3 per cent and Paris was off by 0.6 per cent.

Shares in New York slipped by 0.2 per cent as trading got under way there.

“We are starting to see the first meaningful de-risking from investors amid concern over Brexit,” remarked Stephen Innes, chief global markets strategist at axi.

CMC Markets analyst David Madden added: “With respect to British-European relations, things have gone from bad to worse this week and now both sides are saying that a no-deal outcome is a very real possibility.” 

The pound fell to US$1.3214 (RM5.36), while the euro jumped to 91.74 pence.

‘Low expectations’

EU chief Ursula von der Leyen has told the bloc’s leaders there were “low expectations” that a post-Brexit trade deal could be struck with Britain, EU sources said. 

The clock was ticking down to the latest deadline, on Sunday, to make a call on prolonging negotiations or give up.

British Prime Minister Boris Johnson said the chances of not reaching a deal were “very, very likely”, in which case Britain would trade with the EU on terms established by the World Trade Organization.

Talks continued Friday between EU and British negotiators but they were struggling to break deadlocks on issues that included fishing rights and fair trade regulations.

The possibility that Britain will leave the EU without a deal pushed the pound lower as investors contemplated cross-Channel trade being subject to tariffs and quotas from January 1.

The Bank of England said today that financial services faced “some disruption” when the deadline passes, but added that UK commercial lenders — already dealing with effects of the coronavirus pandemic—were well-prepared.

Stimulus news

Elsewhere, Asian equities mostly rose today but stalled US stimulus talks and rising Covid-19 infections continued to counter vaccine-based optimism.

While most observers are confident the world economy will enjoy a strong recovery next year as inoculations are administered, a widespread increase in infections at present weighed on trade.

There was good news on the European stimulus front, however, as EU leaders resolved a dispute with Poland and Hungary that saved a €1.8-trillion (RM8.5-trillion) recovery plan for the 27-member bloc.

The European Central Bank has also boosted its main virus-fighting tool, an emergency bond-buying programme, by €500 billion to €1.85 trillion and extended it by nine months.

Key figures around 1500 GMT

London — FTSE 100: DOWN 0.6 per cent at 6,560.04 points

Frankfurt — DAX 30: DOWN 1.3 per cent at 13,129.48

Paris — CAC 40: DOWN 0.6 per cent at 5,517.62

EURO STOXX 50: DOWN 0.8 per cent at 3,492.82

New York — Dow: DOWN 0.2 per cent at 29,960.68

Tokyo — Nikkei 225: DOWN 0.4 per cent at 26,652.52 (close)

Hong Kong — Hang Seng: UP 0.4 per cent at 26,505.87 (close)

Shanghai — Composite: DOWN 0.8 per cent at 3,347.19 (close)

Pound/dollar: DOWN at US$1.3214 from US$1.3295 at 2200 GMT

Euro/pound: UP at 91.74 pence from 91.29 pence

Euro/dollar: DOWN at US$1.2122 from US$1.2138

Dollar/yen: DOWN at 103.96 yen from 104.24 yen

West Texas Intermediate: DOWN 0.2 per cent at US$46.69 per barrel

Brent North Sea crude: DOWN 0.3 per cent at US$50.11 — AFP