Last checked at LONDON (Alliance News) - UK markets Monday failed to recover from the effects of the weekend poll showing the "Yes" voters for Scottish independence ahead of the "Better Together" campaign.
The FTSE 250 led the way down, falling 1% to 15,768.25, the FTSE 100 ended down 0.3% at 6,834.77 and the AIM All-Share closed 0.4% lower at 776.13.
European stocks, which were relatively unaffected by Scottish independence poll, performed better with the CAC 40 in Paris ending down 0.2% and the DAX in Frankfurt closing up 0.1%.
At the close of European markets the US were trading broadly flat with the DJIA trading flat, the S&P 500 down 0.1% while the NASDAQ Composite trades up 0.3%.
The FTSE 100 was dragged down on the back of a weekend YouGov poll of Scottish voters, carried out last week which found that 51% of those that had made up their mind plan to vote "Yes" on September 18 for an independent Scotland, compared to 49% that plan to vote "No." The poll was the first of its kind to give the separatists a lead.
Stocks particularly exposed to Scotland were amongst the top fallers on the blue-chip index with Lloyds Banking Group down 2.4%, the Royal Bank of Scotland Group down 1.3% and Aberdeen Asset Management down 1.2%.
The pound was severely effect from the uncertainty of Scottish independence as it fell from UDD1.6320 to USD1.6120 in the Asian session and continued lower as traders in London arrived at their desks Monday, reaching a near-ten-month low by midday of USD1.6099.
By the close of trade in Europe, the pound was trading the dollar at USD1.6152.
"The effect on sterling was sharp and dramatic, with the pound sinking to levels last seen in November last year against the dollar. Even this morning, the downside dominates and with uncertainty weighing, it would be of no surprise to see additional losses for the pound," says IG Markets chief market strategist Brenda Kelly.
Christopher Vecchio, a currency analyst at DailyFX emphasised that Scotland's potential split from the pound could send ripples through the rest of Europe. "One potential knock-on effect of this Scottish vote, if they choose their independence, is that other European countries may become emboldened to exit their respective currency unions as well; if Scotland can leave the UK, why can't Italy leave the Euro?" he said.
Away from Scottish independence, Associated British Foods sank to the bottom of the FTSE 100 with its shares dropping 5.2% as investors expressed concern over the ongoing challenges the group faces due to weaker global sugar prices. It reported that revenue and operating profit in its sugar business are set to be substantially lower year-on-year on the back of falling European sugar prices, lower volumes from north China, and a currency translation impact on the unit's operating profit to the tune of around GBP20 million.
AB Foods said the global sugar price is continuing to sit at an "unsustainably low" level of an average of 17 cents, well below the average cost of production. The group did, however, report a solid performance from its Primark and Grocery arms.
Meanwhile, De La Rue finished atop of the FTSE 250 after the company was chosen by the Bank of England as its preferred bidder in the tender for its banknote printing contract. In a statement, the Bank of England said it expects to sign the contract in October, subject to completion of assurance activities in relation to De La Rue's bid, finalisation of the contract, and the final award decision by the Court of the Bank of England. Shares in the company gained 3.7%.
The UK dominates the economic calendar on Tuesday with a host of data being released from the region. The highlights being manufacturing production data at 0930 BST and the National Institute of Economic and Social Research GDP estimate for August at 1500 BST. Also on Tuesday, Bank of England Governor Mark Carney will be speaking at the Trades Union Congress.
In the corporate calendar, FTSE 100-listed Whitbread will be releasing a trading statement, as will FTSE 250-listed Fenner. Dixons Carphone will also post a trading update ahead of its inauguration into the FTSE 100 on September 22.
By Neil Thakrar; neilthakrar@alliancenews.com
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