Pound falls after Manchester blast, stocks steady

Medics at the scene of a reported explosion during a concert in Manchester, on May 23, 2017.
Medics at the scene of a reported explosion during a concert in Manchester, on May 23, 2017. PHOTO: AFP

SINGAPORE (REUTERS) - Sterling extended losses on Tuesday (May 23) after British police said they were treating an explosion in Manchester as a possible terrorist attack, while the euro retained gains made on comments by German Chancellor Angela Merkel that the common currency was "too weak."

The pound remained under pressure after police said at least 19 people were killed and about 50 injured in an explosion at a concert in Manchester where US singer Arianna Grande had been performing.

Polls showing Britain's election race tightening, and a threat by the country's chief Brexit negotiator to walk away from European Union exit talks - set to begin next month - unless the bloc eased its demands added to the currency's woes.

The pound pulled back 0.1 per cent to US$1.299, extending Monday's 0.3 per cent loss.

The euro hit a six-month high overnight after Merkel said the weakness of the euro, due to the European Central Bank's monetary policy, helped explain Germany's relatively high trade surplus. The euro was steady early on Tuesday after jumping as much as 0.5 per cent and closing 0.3 per cent higher on Monday.

MSCI's broadest index of Asia-Pacific shares outside Japan was steady early on Tuesday. It hit its highest level since May 2015 on Monday, posting its biggest one-day gain in over two months.

Japan's Nikkei slipped almost 0.1 per cent.

Australian and South Korean shares both posted gains of about 0.1 per cent.

 
 
 

The MSCI World index was little changed, retaining Monday's 0.6 per cent gains.

Overnight, Wall Street closed as much as 0.8 per cent higher, driven by defense and technology stocks, after US President Donald Trump announced arms deals of up to US$350 billion with Saudi Arabia over the weekend.

An uncertain political climate in the US continued to weigh on the dollar. The dollar weakened 0.2 per cent to 110.98 yen.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, was fractionally lower at 96.934.

A gauge of US economic activity strengthened in April to its highest level since late 2014, suggesting an acceleration in production and hiring activity following an anemic first quarter.

In commodities, oil prices rose for the fifth straight session to their highest level in over a month on growing confidence that top exporters would agree to extend supply curbs this week and speculation that the cuts could be deepened further.

US crude futures jumped 0.8 per cent to US$51.41 a barrel in early trade.

The weaker dollar lifted gold, which climbed 0.25 per cent to US$1,263.17 in its third straight session of gains.