Stocks drop but pound recovers as UK lays out Brexit plan

AP News
Posted: Jan 17, 2017 7:25 AM
Stocks drop but pound recovers as UK lays out Brexit plan

BEIJING (AP) — Global stocks fell Tuesday but the pound rebounded as British Prime Minister Theresa May said her country will remain open to new trade opportunities as it withdraws from the European Union's single market.

KEEPING SCORE: Germany's DAX index was down 0.7 percent to 11,470 and France's CAC-40 shed 0.5 percent to 4,855. London's FTSE 100 lost 0.6 percent to 7,284. On Wall Street, the future for the Dow Jones industrial average lost 0.3 percent and that for the Standard & Poor's 500 index fell 0.4 percent.

BREXIT: British leader May said in a highly anticipated speech Tuesday that the country will leave the EU's single market but will focus on remaining open to global trade. Fears about the impact of a British withdrawal have roiled global markets since Britain's public voted in June to leave the bloc. The British pound has lost one-fifth of its value since then. May's focus on keeping Britain open saw the pound recover some of the most recent losses.

POUND REACTION: The British currency rallied 1.6 percent on the day to $1.2243. On Monday it was around $1.20 — its lowest level since October, when a "flash crash" pushed it to a 31-year low against the dollar.

ASIA'S DAY: Tokyo's Nikkei 225 index lost 1.5 percent to 18,813.53 and the Shanghai Composite Index gained 0.2 percent to 3,108.77. Sydney's S&P-ASX 200 fell 0.9 percent to 5,699.40 and New Zealand also declined. Seoul's Kospi added 0.4 percent to 3,071.87. Benchmarks in Taiwan, Indonesia and Bangkok gained while Singapore fell.

CHINA'S UPGRADE: The International Monetary Fund raised its growth forecast for China but warned about rising debt that has prompted concern about the country's finances. The IMF said the world's second-largest economy should expand by 6.5 percent this year, up 0.3 percentage points from its last forecast in October. However, growth is supported by government spending and surging credit, which "raises the risk of a sharper slowdown," the agency said. The report adds to mounting warnings about the economic drag of debt that has soared since the 2008 global crisis as Beijing used infusions of credit to shore up growth.

ENERGY: Benchmark U.S. crude gained 56 cents to $52.93 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 64 cents on Monday. Brent crude, used to price international oils, rose 49 cents to $56.35 in London, having lost 39 cents the previous session.

CURRENCY: The dollar declined to 113.33 yen from Monday's 113.94. The euro gained to $1.0696 from $1.0613.