THE FTSE 100 lagged its continental rivals after the pound was propelled to a five-month high against the euro by resurgent hopes of a Brexit deal.
The currency’s rally spilt over into a second day as a rollercoaster ride highlighted its hyper-sensitivity to Brexit headlines. After its early gains were erased by the DUP warning that the UK is “heading for no deal”, restless currency traders latched on to Brexit Secretary Dominic Raab giving a crunch Cabinet meeting the “thumbs up”.
Speculation that a deal could be reached before the end of the week helped sterling rally as much as 0.4pc versus the euro to €1.1466, its highest level since May, while it flirted with the $1.31 mark against the dollar after climbing 0.6pc.
The FTSE 100’s international earners weighed heavily on the index as the pound’s leap reduced the relative value of their earnings. Sinking dollar earners British American Tobacco and AstraZeneca dragged the index to a 63.16-point loss at 7,040.68.
Elsewhere, oil prices slumped to their lowest level in 12 weeks as supply shortage fears fizzled out. The US has granted waivers to several countries impacted by its sanctions on Iranian oil exports, including China and India.
Brent crude tumbled as much as 2.7pc to $73.28 per barrel late in afternoon trading as Royal Dutch Shell ‘B’ slid 27.5p to £24.56.
Embattled regional airline Flybe took off after HSBC advised investors to snap up a bargain following its recent share price collapse.
It told clients in an upgrade to “buy” that a flurry of dealmaking in the sector could sweep the UK regional airlines. “The company has assets that have value which we think the market is currently ignoring,” analyst Achal Kumar said as Flybe climbed 0.6p to 11p, a 5.8pc surge.
Mining giant Glencore slipped back 9.3p to 311.9p after halting operations at a key cobalt mine in the Democratic Republic of Congo on discovering uranium in the battery material mined from the site.
Katanga Mining, which operates the mine on behalf of Glencore, said that it is removing the uranium at a cost of around $25m (£19m) but would face disruption at the mine until the end of the second quarter in 2019.
Oil and mining services company Weir rallied 76.5p to £15.89 despite warning that the slowdown in the US shale industry would hit its full-year profits. It reassured investors with surging order growth from its mining business.
Ad giant WPP slipped 12.8p to 881p after JP Morgan warned that it has missed out on accelerating growth in the beleaguered marketing industry. Lloyd’s of London insurer Hiscox’s slide extended into a second day as City scribblers piled on the pressure with price target cuts.