LONDON, March 20 — The pound fell sharply today after British Prime Minister Theresa May announced it was seeking a delay to its exit from the European Union until June 30, while investors awaited the US Federal Reserve’s interest rate call.

“The pound’s Wednesday only got worse after the confirmation that Theresa May is seeking a short delay from the EU, one that arguably does not give the government enough time to get through a sterling-positive Brexit deal,” Spreadex analyst Connor Campbell told AFP.

“It appears that, despite the various votes highlighting MPs unwilling to leave the EU without a deal, that kind of disastrous exit is still very much on the table.”

The pound lost about half a pence in the space of roughly 10 minutes after May announced the delay, bringing its loss for the day to around one per cent.

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May had been widely expected to ask the bloc for an extension of the March 29 deadline for leaving, having seen her exit proposals killed off by MPs.

The European Commission, for its part, warned EU leaders in an internal briefing note ahead of an summit in Brussels that delaying Brexit to June 30 would bring “serious legal and political risks”.

It urged a shorter postponement to before European Parliament elections in May, or a much longer one to at least the end of this year.

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“This is the only way of protecting the functioning of the EU institutions and their ability to take decisions,” said the commission note, which was prepared before May’s request for a delay until June 30.

Fed watch

Later today, the Federal Reserve’s March policy meeting concludes, with analysts predicting it will announce a slower pace of interest rate hikes as the world’s biggest economy shows signs of softening amid trade tensions.

Wall Street opened without much change.

“US stocks are hovering near the unchanged mark as investors tread water ahead of the afternoon release of the Fed’s rate decision,” said analysts at Charles Schwab brokerage.

Investors also eyed China-US trade talks, optimism about which have helped propel equities higher across the world this year — offsetting concerns about the outlook for the global economy.

But dealers have been spooked by a report that some US officials are feeling some pushback from China on a number of demands, including on the crucial issue of intellectual property.

The unnamed negotiators said the Chinese side was growing concerned at the lack of assurances that US duties would be removed, according to the Bloomberg story.

‘Floodgates could open’ for Bayer

In Europe, Frankfurt fell the heaviest with Bayer shares tumbling after a US jury ruled its weed-killer Roundup was a “substantial factor” in an amateur gardener’s cancer.

Frankfurt stocks meanwhile sank 1.5 per cent as the threat to German giant Bayer and its subsidiary Monsanto from US litigation swelled.

A wave of lawsuits has put pressure on Bayer since its US$63-billion takeover of Monsanto last year, spooking investors who worry damages payouts could escalate if the firm fails to convince courts its product is safe.

“Bayer shares have sold-off sharply ... after a US jury found that the company’s weed killer, Roundup, caused cancer,” said CMC Markets analyst David Madden.

“This could open the floodgates to further cases, and the group might have to set aside vast sums of money for potential cases.”

The news sent Bayer shares nose-diving roughly 11.5 per cent to €61.69 in afternoon trading.

Key figures around 1330 GMT

London – FTSE 100: UP 0.07 per cent at 7,329.09 points

Frankfurt – DAX 30: DOWN 1.5 per cent at 11,610.24

Paris – CAC 40: DOWN 0.3 per cent at 5,408.92

EURO STOXX 50: DOWN 0.8 per cent at 3,381.91

New York – DOW: DOWN 0.1 per cent at 25,861.92

Tokyo – Nikkei 225: UP 0.2 per cent at 21,608.92 (close)

Hong Kong – Hang Seng: DOWN 0.5 per cent at 29,320.97 (close)

Shanghai – Composite: FLAT at 3,090.64 (close)

Pound/dollar: DOWN at US$1.3175 from US$1.3268 at 2100 GMT on Tuesday

Euro/pound: UP at 86.15 pence from 85.56 pence

Euro/dollar: UP at US$1.1357 from US$1.1352

Dollar/yen: UP at 111.44 yen from 111.39 yen

Oil – Brent Crude: UP one cent at US$67.62 per barrel

Oil – West Texas Intermediate: DOWN 18 cents at US$58.85.

— AFP