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LONDON (Alliance News) - Sentiment in equity markets in London and Europe remained fragile Wednesday, with the FTSE 100 giving up small opening gains by midday, as investors flocked to safe-haven assets such as gold and the Japanese yen.

Having been called lower before the open, the blue-chip index surprisingly moved higher shortly after the open, as investors looked to capitalise on the pound making yet another 31-year low overnight of USD1.2797. A large proportion of blue-chip companies earn their revenue overseas, meaning a weak pound is beneficial. At midday, the pound was quoted at GBP1.3012.

However, as the morning session wore on, the FTSE 100 gave up early gains and by midday it traded down 1.3%, or 84.92 points, at 6,460.45.

It was the usual post-referendum suspects weighing on the blue-chip index, with housebuilders and financial stocks amongst the heaviest decliners. This time they were joined by grocers Tesco, down 7.2%, and Wm Morrison Supermarkets, down 5.9%, after both were downgraded by HSBC. The bank cut Tesco to Hold from Buy, while Morrisons was cut to Reduce from Hold.

Amid the market's Brexit jitters, safe-haven assets were riding high. The Japanese yen was in demand, with the dollar trading just above JPY100, and the price of gold was at its highest level since March 2014, reaching USD1,375.01 an ounce.

Precious metals miners Fresnillo, up 7.1%, and Randgold Resources, up 5.1%, were again reaching notable highs. Fresnillo touched its highest share price since late 2011, while Randgold's shares reached another all-time high.

In the FTSE 250, Centamin shares were up 9.0%, Acacia Mining up 7.0% and Polymetal International was up 4.1%.

The FTSE 250 lagged behind its larger-cap peer, as it has done ever since the UK voted to leave the European Union, because of the domestic focus of many of its constituents. The mid-cap index was down 1.5% at 15,503.23.

London's junior AIM market also was lower. The AIM All-Share index was down 1.0% at 697.87.

Equity markets elsewhere in Europe were trading lower. The CAC 40 in Paris and the DAX 30 in Frankfurt were both down 2.3%. The Euro Stoxx 50, which is an index of blue-chip companies in the eurozone, was down 2.3%.

Ahead of the open on Wall Street, futures pointed the Dow Jones Industrial Average and the Nasdaq 100 both down 0.2% and the S&P 500 down 0.1%.

In UK corporate news, the chief executive of insurer and investment manager Aviva said the company remains in a strong position and should be able to continue to grow following the UK's vote to leave the European Union.

Mark Wilson, speaking ahead of Aviva's capital markets day, said the "fundamentals are sound" in the business. "Our balance sheet is strong and resilient, and we are a simpler, focused group with excellent franchises. This is a strong foundation from which to grow profits, cash-flow and dividends over the coming years," he added.

Wilson said it is too early to quantify the precise impact a Brexit will have, but said Aviva is "confident we can continue to grow".

His comments come a day after Aviva Investors, Aviva's investment management arm, became one of three major fund managers to suspend trading in its commercial property fund following a sharp rise in redemptions in response to the Brexit vote. The other fund managers were Prudential's M&G Investments and Standard Life Investments, the investment management arm of Standard Life.

Aviva traded down 3.6%.

Tullow Oil was the worst performer in the FTSE 250, down 15%, after the oil and gas explorer launched a USD300.0 million convertible bond offering in order to diversify its sources of funding.

Tullow said the convertible bonds will mature in 2021, with the initial conversion price to be set at a premium of 30% to 35% to the volume-weighted average price of Tullow shares on Wednesday.

Funds raised through the issue will diversify Tullow's funding sources and will be used for general corporate purposes, in addition to funding development work at its assets in West and East Africa, the company added.

Melrose Industries was the best performer in the FTSE All-Share, up 32%, after it agreed a USD1.44 billion deal to acquire US manufacturing company Nortek and will launch a rights issue of shares to finance the deal.

The industrial group said it will acquire Providence, Rhode Island-based Nortek for USD86.00 per share, a 38% premium to Nortek's closing price on NASDAQ in New York on Tuesday.

Melrose said its offer already has support of shareholders representing 68.7% of Nortek, as well as the unanimous support of the Nortek board. Melrose will finance the deal with a fully-underwritten rights issue of 12 new shares at 95.00 pence per share for each 1 existing share, raising a total of GBP1.61 billion.

India-focused miner Kolar Gold said Geomysore Mining Services (India), in which Kolar holds a stake, has secured funding to back a drilling programme.

Kolar said in March GMSI was in the process of raising USD2.2 million for additional drilling and to complete the economic feasibility study for the East Block open pit mine in India. Kolar said at the time it would not be able to participate in the fundraising without raising funds itself and, through not participating, its holding in GSMI would be diluted by the fundraising.

Since then, Kolar said GSMI has secured a USD2.4 million equity investment from Thriveni Earth Movers Pvt, a leading Indian mining firm and GSMI's drilling contractor. The stock was up 37%, making it the best performer in the AIM All-Share.

Still ahead in the economic calendar, the US Federal Reserve will release the minutes of its last monetary policy meeting at 1900 BST, after the London stock market close. Before then, there is the US trade balance at 1330 BST, the Redbook index at 1355 BST, the Markit composite and services purchasing managers' index for the US at 1445 BST and the ISM non-manufacturing PMI at 1500 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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