Europe Markets

Europe tumbles at close amid Brexit fears; pound hits fresh 31-year low

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European stocks finished sharply lower on Wednesday amid continued political and economic uncertainty in the European Union (EU) following the Brexit vote.

Brexit fallout continues: UK real estate in focus

The European FTSEurofirst 300 ended 1.6 percent provisionally, with all sectors posting solid losses by the close. Looking at individual bourses, the U.K.'s FTSE 100 ended around 1.2 percent down; while France's CAC and Germany's DAX fell even further, off 1.9 and 1.7 percent respectively. In peripheral markets however, the Athens Stock exchange closed higher, up 0.5 percent.

Growing anxiety about the fallout of the U.K.'s vote to leave the EU has continued to plague markets. U.S. stocks traded mostly lower around Europe's close, as growth concerns continued to weigh on sentiment. Investors scurried into safe-haven plays sending bond yields to record lows.

As a result of the growing uncertainty, the British pound also dropped to a fresh 31-year low amid Brexit concerns, trading at $1.2910 at Europe's close, after dropping as low as $1.2796 during Wednesday's early hours.

U.K. real estate funds were in focus after Standard Life, Aviva and M&G Investments all halted redemptions this week. Shares of both Standard Life and Aviva closed sharply lower. Aviva released a statement on Wednesday saying that it aims to increase its dividend pay-out ratio next year, adding that it was too soon to judge the impact of Brexit on the insurer.

Meanwhile, Columbia Threadneedle Investments announced it was temporarily suspending dealing in its U.K. property authorized investment fund on Wednesday, with Henderson Global Investors too, temporarily suspending trading in its U.K. property fund and feeder funds.

Britain's housebuilders were also in negative territory by the close, including Taylor Wimpey and Bovis Homes, which both closed over 3 percent down.

Supermarkets fall

Elsewhere in the U.K., Tesco slumped some 8 percent after HSBC cut its price target for the stock. The bank also slashed its price target for WM Morrison and J Sainsbury, sending shares in the supermarket giants sharply lower.

Budget airline easyJet saw shares under pressure despite reporting a rise in passenger numbers for June. And British Airways owner said passenger traffic also grew in June but premium traffic remained flat. Shares closed down 6.6 percent. Meanwhile, Barclays cut its price target for Ryanair, sending shares to close lower.

Top performers: Precious metal firms, BMPS

Precious metals miners Fresnillo and Randgold Resources were some of Europe's best performers—closing up 6.1 and 4.35 percent respectively—as gold rose to its highest level in more than two years, boosted by the "risk-off" sentiment in markets.

On the oil front, crude prices fluctuated during trade as investors grew concerned over consumption due to weaker demand from refineries. Brent and U.S. crude hovering around $47.70 and $46.45 at Europe's close respectively. Tullow Oil shares sank to the bottom of the STOXX 600, closing down 12.5 percent after it announced a $300 million bond offering to fund investment in its West and East Africa assets.

Our priority is reducing uncertainty: ECB's Villeroy

Elsewhere, Italian banks remain in focus for investors. Banca Monte dei Paschi di Siena shares have seen a volatile couple of sessions this week after the European Central Bank asked BMPS to slash its bad debts by over 40 percent in three years. Late Tuesday, market watchdog Consob said short selling of BMPS shares would be banned in Wednesday's trading session, Reuters reported.

Shares of BMPS rose more than 14 percent before paring to close up 6.1 percent. The lender is looking into the possibility of a 2-3 billion euro capital increase guaranteed by the state.

A handful of other European lenders ended higher, however most banking stocks finished in the red, including Britain's Royal Bank of Scotland, Lloyds and Barclays, which all fell after Mediobanca Securities cut its price target on each stock.

In other key stock moves, Telecom Italia sank 10.8 percent after French telecom player Iliad announced it was entering the Italian market. JPMorgan also cut its price for Telecom Italia shares.

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