City struggles to shake off fears of a no-deal Brexit as sterling suffers

THE City struggled to dispel lingering no-deal Brexit fears yesterday as sterling’s recovery faltered and the sharp slide in banks and housebuilders spilt over into a second day.

Sterling gave up its modest gains as speculation swirled over the 48 letters needed to trigger a vote of no confidence in the Prime Minister, and EU leaders cast doubt on Brexiteer plans to change the draft proposal.

Investors had regained their composure after five key Brexiteer ministers vowed to stay on in the Cabinet to salvage Theresa May’s draft deal. Sterling started to clawed back losses, rallying as much as 0.6pc against the euro in intraday trading. But any optimism in the Square Mile fizzled out towards the end of a turbulent week. The pound ended the week down 1.9pc against the euro at €1.1234, its worst weekly decline since the 2017 election. But the currency clawed back above $1.28 versus the tumbling dollar.

London’s Uk-exposed stocks also struggled to recover from their no-deal dip. Royal Bank of Scotland and housebuilders extended their decline amid concerns over their exposure to an economic downturn. After Thursday’s 9.6pc slide, RBS shed a further 7.3p to 216.9p.

Britain’s second-biggest housebuilder Persimmon hit a 13-month low as HSBC warned of a 30pc slump in house prices and a 50pc plunge in housebuilding in a no-deal scenario. Persimmon dropped 51p to £21.28 while rivals Berkeley and Taylor Wimpey shed 63p to £33.66 and 1.6p to 148.4p respectively.

Donald Trump boosted Wall Street by suggesting that the US may not have to slap more tariffs on China, but the easing in trade tensions ahead of a key meeting between the countries’ leaders came too late to lift European markets. The FTSE 100 closed 24.13 points lower at 7,013.88 while the more domestic-focused FTSE 250 dropped a further 73.12 points to 18,589.09, leaving the index on course for a fourth straight month of decline.

Elsewhere, stricken parcel deliverer Royal Mail plunged to a fresh record low after City scribblers raised questions over its dividend.

Sinking letter revenue and worsening labour cost pressures will leave the FTSE 100 company short of cash to cover its dividend, Credit Suisse warned, slashing its target price for the company from 339p to 301p. After closing below its controversial IPO price for the first time ever on Thursday, it slipped further to a new record low, dropping 9.4p to 316p.

Drugmaker Hutchison China Meditech

plummeted £10.85 to £45.15, a 19pc tumble, after its cancer treatment Fruquintinib failed to significantly improve survival rates compared with a placebo in trials. Tobacco giant British American Tobacco

extended its drop to a seventh straight day after US regulators confirmed that they will seek a ban on menthol-flavoured cigarettes. BAT, the maker of Newport, the leading US menthol brand, slid a further 68p to £27.07, its lowest level since 2011. The company has now plunged 21pc in its seven-day fall.

Finally, Halma rallied 27p to £13.36 after snapping up radar surveillance provider Navtech Radar in a £21m deal.