European stocks slip despite Chancellor Osborne's comments

Traders work at their desks in front of the German share price index, DAX board, in Frankfurt, on June 7, 2016.
Traders work at their desks in front of the German share price index, DAX board, in Frankfurt, on June 7, 2016.PHOTO: REUTERS

LONDON (AFP) - European stock markets mostly slid Monday as British finance minister George Osborne attempted to calm jitters after last week's shock Brexit referendum.

Britain's surprise referendum decision to leave the European Union wiped US$2.1 trillion (S$2.83 trillion) off market valuations last Friday and sent the pound collapsing to a 31-year low against the dollar.

"The fallout from the UK's vote against EU membership continues to ripple through financial markets," Accendo Markets analyst Mike van Dulken told AFP.

On Monday, London's benchmark FTSE 100 index of top blue-chip companies fell 0.7 per cent to 6,098.70 points, compared with last Friday's closing level.

Shares in banks, airlines and property companies plunged on the London stock exchange as investors singled out the three sectors as being the most vulnerable to Brexit. EasyJet stock fell 16 per cent after issuing a profit warning, while Royal Bank of Scotland shares plunged 15 per cent, vastly underperforming the overall key FTSE-100 index which was down 1.4 per cent at 0845 GMT (4:45 pm Singapore time).

The pound meanwhile dropped to US$1.3392 but held above Friday's 31-year low of US$1.3229 - the worst level since September 1985.

Mr Osborne sought to calm markets after the country's shock vote to leave the EU, and insisted it would be not rushed into a break-up despite pressure from EU leaders.

He said Britain's economy was "as strong as could be" to deal with the fallout of last Thursday's momentous Brexit vote, which has already claimed the scalp of Prime Minister David Cameron and fuelled fears of a break-up of the United Kingdom.

In eurozone equity trading, Frankfurt's DAX 30 index dipped 0.1 per cent to 9,544.0 points and the CAC 40 in Paris shed 0.2 per cent to 4,097.3.

On the upside, Madrid's IBEX 35 index rallied almost three per cent on investor relief over Spain's weekend election.

"The UK stock market has been relatively stable at the start of the week as investors absorb the ramifications of Friday's momentous events, aided by reassuring comments from UK Chancellor Osborne," said RIA Capital Markets macro strategist Nick Stamenkovic.

"However, the pound looks vulnerable particularly against the dollar as investor demand for safe-haven assets persists."

US Secretary of State John Kerry is meanwhile due in London later in the day after a stop-off in Brussels, while the leaders of Germany, France and Italy will meet in Berlin to tackle the crisis. No-frills airline EasyJet topped the FTSE 100 fallers board in London, tanking more than 15 percent to 1,116 pence after issuing a grim profits warning.

Banking sector share prices also nursed significant losses on Brexit worries, with Barclays down 0.7 per cent, Royal Bank of Scotland losing 9.4 per cent and Lloyds shedding 6.6 per cent.