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Pound and FTSE fall as May asks for three-month Brexit delay

Pound and FTSE fall as May asks for three-month Brexit delay

The pound has fallen after prime minister Theresa May's request for a three-month delay to Brexit drew immediate resistance from the European Commission.

Sterling dropped below the $1.32 mark to trade at $1.319 against the dollar, down 0.6% on the day, as May submitted her request for a delay until 30 June, a shorter extension than investors had been expecting.

May said in a letter to European Council president Donald Tusk that the delay would allow her to bring a modified version of her deal to parliament for a third time.

But according to a document seen by Reuters, the European Commission is opposed to an extension to 30 June, favouring either a short delay to 23 May, the day elections for the European Parliament are due to be held, or a much longer one.

'Any extension offered to the United Kingdom should last either until 23 May 2019 or should be significantly longer and require European elections,' the document read, according to the newswire.

'This is the only way of protecting the functioning of the EU institutions and their ability to take decisions.'

'The pound has continued to tumble today as the conflict between the European Union and Theresa May over the length of the Brexit extension has come to the fore,' said Hamish Muress, currency analyst at OFX.

'Reports that the EU are already finding the date of 20 June difficult to swallow has seen investors' confidence in Theresa May's current approach plummet.'

Even the pound's fall wasn't enough to lift the FTSE 100, which tends to benefit from sterling weakness due to its stocks' heavy overseas earnings.

The UK blue-chip index drifted seven points lower to 7,317, joining other European markets in the red.

Brexit fears saw stocks geared towards the UK domestic economy fall to the bottom of the index.

House builders were among the worst hit. Persimmon (PSN) fell 2.9% to £22.38, Taylor Wimpey (TW) dropped 2.3% to 180.8p and Berkeley (BKGH) traded 2.2% lower at £38.79.

Retailers Next (NXT) and Marks and Spencer (MKS) were also hit, down 2% at £52.06 and 2.1% lower at 271.4p respectively.

The FTSE 250 index of 'mid-cap' stocks, which has a larger weighting to the UK economy, fell 0.6%.

Kier (KIE) was the biggest faller, down 11.2% at 429.6p as the construction group reported a 14.5% slump in first-half earnings.

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