Taylor Wimpey Share News (TW.)

LONDON (Alliance News) - UK stocks and the pound resumed their post-Brexit rout Monday, with banks and housebuilders feeling the brunt of the selling as investors fled into defensive safe havens.

At midday on the London Stock Exchange, the FTSE 100 index was down 1.7%, or 101.01 points, at 6,037.68. The blue-chip index had rallied to the close on Friday after plunging at the open, but it was heading back south Monday.

The FTSE 250 was down 5.2% at 15,245.01 points and the AIM All-Share down 2.5% at 686.57. All three indices remain above their worst levels on Friday.

UK Chancellor of the Exchequer George Osborne attempted to calm markets and investors after the country's vote to leave the European Union by claiming Britain's economy is "fundamentally strong" and remains open for business.

In his first comments since the Brexit vote, he warned that it "would not be plain sailing", but also assured that the country was "equipped for whatever happens."

Britain is "ready to confront what the future holds for us from a position of strength," he said.

However, despite Osborne's soothing message there continued to be turmoil on both the UK political scene and markets.

"The extent of the uncertainty that now clouds the UK's economic and political outlook is hard to exaggerate," commented Kit Juckes, global fixed income strategist at French bank Societe Generale.

"The government is in limbo ahead of a Conservative Party leadership contest. The opposition is in chaos. The rest of the EU would like negotiations on the UK's exit to begin, but they have no-one to negotiate with," he added.

Juckes said uncertainty is negative for the UK economy, investor confidence and the pound, which fell to a fresh 31-year low versus the dollar on Monday. Sterling hit a low of USD1.3191, surpassing its previous low of USD1.3227 which it made in the immediate aftermath of the Friday's Brexit vote.

It was a defensive picture in London's equity market, with gold miners tracking gains in the gold price, joined by pharmaceutical companies and utilities.

The fallers were dominated by banks and housebuilders, with state-backed lender Royal Bank of Scotland Group down 17%, housebuilder Taylor Wimpey down 15%, and bank Barclays down 15%.

"While the chancellor's measured tone appears to have helped alleviate concerns about a rudderless UK ship, concerns about the banking sector continue to be a pressure point for investors, as dark threats about the removal of financial passporting continue to weigh, and yields continue to fall," said Michael Hewson, chief market analyst at CMC Markets.

UK 10-year gilt yields fell below 1.0% for the first time as investors continued to pour into the safety of bonds.

In equity markets on mainland Europe, the French CAC 40 index was down 1.9% and the German DAX 30 down 2.0%.

Ahead of the open in New York, futures pointed to a lower open on Wall Street. The Dow Jones Industrial Average was indicated down 0.6%, the S&P 500 down 0.7% and the Nasdaq 100 down 0.8%.

Elsewhere in London, easyJet was the biggest FTSE 100 faller, down 19%. The low-cost carrier said pretax profit in its fiscal third quarter will be lower year-on-year following flight cancellations and the Egyptair crash and said the UK's vote to leave the European Union will hit revenue per seat in the second half of the year.

The company said it has experienced 1,061 cancellations so far in the third quarter to the end of June, due to a significant number of disruptive events including air traffic control strikes in France, runway and congestion issues at Gatwick airport, and severe weather conditions.

Those incidents hit third-quarter pretax profit by around GBP28 million year-on-year, easyJet said, while also reducing revenue per seat by around 1.6 percentage points.

In addition, the Brexit decision will contribute to further economic and consumer uncertainty this summer, easyJet said, leading to an expected mid-single digit fall in revenue per seat at constant currency in the second half of the financial year, year-on-year.

Foxtons Group was one of the biggest fallers in the FTSE All-Share, down 22%, after it said the EU vote will add to the already-uncertain conditions in the London residential property market.

The London-focused estate agent said it is too early to accurately predict what impact Brexit will have on London property sales, but it said the upturn it had been anticipating in the second half is now unlikely to materialise.

As a result, revenue and adjusted earnings before interest, taxation, depreciation and amortisation will be "significantly lower" year-on-year in 2016, as challenging conditions continue through the remainder of the year.

"Looking further ahead, we remain confident on the attractiveness of the London property sales markets and our strategy to focus on the outer London mid-market segment. Furthermore, our strong lettings business provides strong downside protection," said Foxtons Chief Executive Nic Budden.

In the AIM All-Share, Biome Technologies was the worst performer, down 31%. The bioplastics and radio-frequency technology business said that, although its financial performance is expected to improve during 2016, its results will fail to meet board expectations after revenue came in lower than expected during the first half of the year.

The group said revenue in the first half came in at GBP2.2 million, only a touch higher than the GBP2.1 million generated in 2015 and below the company's target for the period.

This shortfall is due to a reduced demand for already commercialised products in the Bioplastics Division and some slippage of the Stanelco RF's division's order pipeline into the second half, Biome Technologies said.

Still ahead in the economic calendar, in the US, the goods trade balance is at 1330 BST, while Markit's services and composite purchasing manager's indices readings are at 1445 BST.

European Central Bank President Mario Draghi will be speaking in Portugal at 1830 BST.

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

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