Stocks gain broadly, pound falls on EU exit fears

The Pak Banker - - MARKETS/SPORTS -

Shares rose in Europe and Asia on Mon­day along with oil and com­mod­ity prices, while ster­ling fell against the dol­lar and euro on con­cerns Bri­tain may vote to leave the Euro­pean Union.

The pound fell 1.5 per­cent to a three-week low of $1.4175, putting it on track for its big­gest daily per­cent­age loss in 11 months, while the euro rose 1.1 per­cent to 78.17 pence.

Lon­don Mayor Boris John­son, a political heavy­weight in David Cameron's rul­ing Con­ser­va­tive Party, on Sun­day de­fied his leader by say­ing he would sup­port the cam­paign to leave the EU in a June 23 ref­er­en­dum.

With deal­ers ex­pect­ing choppy trad­ing in the run-up to the vote, the cost of hedg­ing against weak­ness in ster­ling hit its high­est in more than four years GBPVOL=.

"The 'out' camp were strug­gling to get a fig­ure­head who was pop­u­lar and Boris has given them that boost," said Alvin Tan, a strate­gist with French bank So­ci­ete Gen­erale in Lon­don.

"I think there is gen­uine worry that Bri­tain might vote to leave and the un­cer­tainty is go­ing to rise into the ref­er­en­dum."

Bri­tish shares, how­ever, rose, in line with other Euro­pean bourses. Lon­don's re­sourcesheavy FTSE 100 in­dex .FTSE was up 1.1 per­cent, though a 4.7 per­cent fall in HSBC (HSBA.L) af­ter the bank's 2015 profit fell short of ex­pec­ta­tions took its toll.

"Brexit is not a story for eq­ui­ties at the mo­ment but that might change.... For sure the prob­a­bil­ity of Brexit has in­creased af­ter the po­si­tion­ing of Boris John­son," said Jur­gen Michels, chief econ­o­mist at Bay­ernLB in Mu­nich.

Ten-year yields on UK govern­ment debt GB10YT=RR rose 2 ba­sis points to 1.44 per­cent. Ger­man 10- year yields DE10YT=TWEB, the euro zone bench­mark, were flat at 0.2 per­cent.

Euro­pean shares ex­tended last week's gains even af­ter sur­veys of eco­nomic ac­tiv­ity painted a mixed pic­ture. The pan-Euro­pean FTSEurofirst 300 in­dex .FTEU3 gained 1.2 per­cent, lifted by min­ers as the price of oil and other com­modi­ties rose.

A sur­vey of pri­vate sec­tor busi­ness ac­tiv­ity showed it in­creased at its weak­est pace in more than a year this month, ac­cord­ing to Markit's com­pos­ite flash Pur­chas­ing Man­agers' In­dex.

MSCI's broad­est in­dex of Asia-Pa­cific shares out­side Ja­pan . MIAPJ0000PUS gained 0.9 per­cent, hav­ing re­bounded more than 4 per­cent last week.

China's bench­mark in­dexes rose 2 per­cent as in­vestors wel­comed Bei­jing's de­ci­sion to re­place its top se­cu­ri­ties reg­u­la­tor and on signs the govern­ment was step­ping up its eco­nomic stim­u­lus ef­forts.

Tokyo's Nikkei .N225 closed up 0.9 per­cent, helped by a weaker yen JPY=, which fell 0.3 per­cent to 112.88 per dol­lar.

The euro EUR= fell 0.4 per­cent to $1.1085, just above last week's low around $1.1064.

Oil prices rose as a fall in the num­ber of U.S. rigs was ex­pected to lead to re­duced out­put. Global bench­mark Brent crude LCOc1 rose 2.3 per­cent, or 79 cents a bar­rel, to $33.79.

Rus­sia and the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries (OPEC) pro­posed to freeze pro­duc­tion at Jan­uary lev­els, though an­a­lysts said this would not help cut over­sup­ply which has seen prices fall 70 per­cent since mid-2014.

Cop­per CMCU3 hit a two-week high on hopes for a re­vival in Chi­nese de­mand. The metal traded up 1.3 per­cent on the day at $4,680 a tonne. Gold XAU= fell as stocks and the dol­lar rose. It was at $1,207 per ounce.

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