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Sterling falls on renewed Brexit fears

London Stock ExchangeTuesday close: Sterling fell by 1.5% against the dollar and the euro as ‘Brexit’ fears came to the fore again.

The EU parliament president said he cannot guarantee it would rubber-stamp any deal agreed this week, and may amend it.

Andy Scott, economist at HiFX, said: “This puts yet another hurdle in the way of Cameron being able to push for the UK to stay in the EU, when the terms under which Britain stay haven’t yet been made legally binding.

“It probably adds to view of those wanting to leave the EU, that it is a slow moving and bureaucratic organisation whose interests aren’t aligned with Britain’s, and increases the ‘Brexit’ risk.

“The uncertainty looks set to keep sterling under pressure in the short-term, particularly with investors on edge and wary of any perceived risks after one of the most volatile starts to the year in decades.”

US markets opened positively, albeit not as convincingly as had been expected.

Bolstered by reports of an agreement among a number of major oil producers not to crank up output any further, the S&P 500 rose 17 points to 1,882 in the first half-hour of trading.

The Dow Jones average was up 110 points at 16,083 and the Nasdaq Composite rose 17 to 1,882.

The oil price reacted positively to first reports of a deal among four major producers on oil output, but investors were disappointed that a freeze rather than a cut in output had been agreed.

Alastair McCaig, market analyst at IG, said: “All they’ve agreed to is not increasing output, and that doesn’t include Iran.”

The uncertainty around the negotiations dented expectations for a supply cut and sent oil tumbling off its highs. Brent crude was down 3.3% at $32.28 after hitting a 12-day high of $35.55 a barrel. UScrude was 1.5% low4 at $28.99 after touching a high of $31.53.

The FTSE 100 was ahead by a marginal 16 points at 4pm.

 

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