Global stocks gain, safe havens retreat as Brexit worries ebb

[June 20, 2016]  By Nigel Stephenson
 
 LONDON (Reuters) - Global stocks rose on Monday and sterling strengthened broadly while safe-havens including the yen and gold retreated, after polls showed support for Britain staying in the EU regaining momentum before Thursday's referendum.

Sterling has been at the sharp end of worries Britons will vote to leave the European Union, and the slightly diminished Brexit fears pushed the pound up 1.5 percent against the dollar and more than 2 percent versus the yen.

Share prices, which fell globally in recent days on the prospect of Britain quitting the bloc as some polls showed the "Leave" campaign ahead, rose strongly.

The pan-European FTSEurofirst 300 index <.FTEU3> added 2.9 percent, led by banks <.SX7P>, while Britain's blue-chip FTSE 100 index <.FTSE> chalked up a similar gain.

MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> rose 1.6 percent. Japan's Nikkei <.N225> climbed 2.4 percent as the yen lost ground.

U.S. e-mini stock index futures <ESc1> <1YMc1> were up more than 1 percent, suggesting Wall Street would also open higher.

Two weekend polls showed "In" regaining the lead and another showed the "Out" campaign's lead narrowing, though the overall picture is of an evenly split electorate. Bookmakers' odds have shown those wishing to stay in the EU ahead and Betfair put the implied probability of a vote to "Remain" at 72 percent on Monday, up from 60-67 percent on Friday.

Campaigning resumed on Sunday, having been suspended for three days after British lawmaker Jo Cox was killed in the street in her constituency on Thursday.

"It might be possible that the events influenced the polls but most experts commented that it is more likely that an expected and well documented 'pull to the status-quo' is responsible for the latest swing," RBC's chief European macro strategist Peter Schaffrik said.

Sterling gained 1.64 percent to $1.4591 <GBP=>, having hit a two-week low of $1.4013 on Thursday. It soared 2.2 percent to 152.63 yen <GBPJPY=> and rose 1.1 percent against the euro to 77.72 pence <EURGBP=>.

"The outcome of the referendum is wide open again," said Ulrich Leuchtmann, currency strategist at Commerzbank. "But at least "Leave" no longer seems the most likely scenario. Should the next polls suggest that the change of sentiment persists euro/sterling may ease further."

People walk through the lobby of the London Stock Exchange in London, Britain August 25, 2015. REUTERS/Suzanne Plunkett

EURO

The euro, which has also suffered due to Brexit worries, rose 0.6 percent to $1.1342 <EUR=>, off a high for the day of $1.1382.

The yen, often sought by investors in times of market tension, fell half a percent to 104.62 per dollar <JPY=>. The dollar fell 0.6 percent against a basket of currencies <.DXY>.

Yields on Low-risk government bonds, another asset sought in troubled times, rose. U.S. 10-year Treasuries <US10YT=RR> yielded 1.65 percent, up 3.6 basis points, after hitting a four-year low of 1.518 percent on Thursday.

German 10-year yields <DE10YT=TWEB> were close to 0.05 percent, up from a record low of minus 0.037 percent on Thursday.

Oil prices, which have also been under pressure from Brexit nerves, extended Friday's gains. Brent crude <LCOc1> traded within a whisker of $50 a barrel at $49.98, up 81 cents on the day.

Gold <XAU=>, another safety play, fell 0.9 percent to $1,286.86 an ounce. It rose 1.5 percent on Friday for its biggest single-day gain since June 3.

(Additional reporting by Shinichi Saoshiro in Tokyo, Anirban Nag and John Geddie in London; editing by John Stonestreet)

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