FTSE hits three-week low as financials, Tesco fall

Britain's top share index fell on Friday, hit by a drop in grocer Tesco and major financial and commodity stocks, while uncertainty over the vote on European Union membership also weighed on the market. The bluechip FTSE 100 index was down 1.9 percent at 6,115.13 points at its close, hitting a three-week low and posting its biggest daily loss in four months.
Tesco dropped 4 percent after the supermarket agreed to sell its Turkish business and Giraffe restaurant chain in the United Kingdom. "The disposal of Giraffe was thought to be off the table, so the apparent change of heart suggests a level of desperation," Jasper Lawler, market analyst at CMC Markets, said in a note. Insurer Standard Life fell 4.4 percent after investment bank UBS cut its price target on the group.
Several traders said they did not expect the FTSE to make much progress in the build-up to the June 23 vote on Britain's membership of the EU, because of uncertainty over the result. The latest betting odds on website Betfair show the implied probability of a British vote to stay in the European Union has risen to almost 78 percent, but opinion polls remain split on the matter.
"The heightened fears over the impact a Brexit could have in the UK, Europe, and global economy has renewed a wave of jitters that has weighed on global sentiment," said FXTM research analyst Lukman Otunuga. A retreat in metals and oil prices also knocked back the shares of mining and energy companies such as BP and BHP Billiton.
London copper ticked lower on Friday, and was hovering near four-month lows as headwinds from a likely mid-term US rate hike that have boosted the dollar added to pressure from tepid physical demand in top user China. "With commodity markets showing weakness in China, we have seen a second day of weakness in the FTSE," said Cornhill Capital stockbroker Lewis Jones.
Precious metals miner Fresnillo gained 0.2 percent while Randgold Resources remained unchanged, reflecting demand for perceived safe-haven assets. Away from the bluechips, Deutsche Bank's downgrades to PageGroup and Hays sent the stocks down 6.6 percent and 6.2 percent lower respectively. Deutsche Bank cut its rating on the pair to "sell" from "hold".