European stocks tumble on exit vote

Lloyds shares collapsed 29pc and the pound is recovering from a 31-year low as Britain considers its next steps.

Barclays shares plummeted 26 per cent in early deals. Picture: AFP.

The UK stock exchange pared heavy early losses but still closed sharply lower as investors contemplated the nation’s path to separation from the European Union.

The benchmark FTSE 100 closed 3.2 per cent lower, dropping 199 points to 6,139.

The index had plunged 8.5 per cent in early trade, before recovering some ground throughout a day where trading volumes were the highest on record.

The broader FTSE 250 – which has more UK-focussed entities – was harder hit, collapsing 7.2 per cent at the closing bell.

Continental markets also tanked at the open but barely managed to recover any ground as investors fretted about the prospect of renegotiated trade agreements.

France’s CAC 40 tumbled 8 per cent, while Germany’s DAX 30 swooned 6.8 per cent.

Spain’s IBEX 35 plummeted 12.4 per cent, its largest fall on record.

The UK market moves followed heavy losses across Asia on Friday, with Sydney sinking 3.2 per cent, Tokyo tumbling 7.9 per cent and Hong Kong hit with falls of 4.4 per cent.

“The liquidity support promised by the Bank of England -- and subsequently the ECB and Federal Reserve -- appears to have been the main catalyst for the turnaround,” said Spreadex analyst Connor Campbell.

“While the FTSE rose phoenix-like from the ashes of its earlier decline, the eurozone indices weren’t quite as lucky... suggesting investors may not only be worried by the Brexit, but by the weekend’s Spanish election,” he said.

In London, banking stocks were wounded, with Lloyds collapsing 29.3 per cent, Barclays plunging 17.9 per cent and Royal Bank of Scotland dropping 18 per cent.

Before polls closed, traders had hoped for a vote to remain, sending the pound above $US1.50. But as the BBC called the leave campaign the winner, the currency took a dive to $US1.3230, its lowest level for 31 years, before recovering somewhat. During the early hours of Saturday morning AEST, the pound was at $US1.3721.

Safe haven gold shot up 4.6 per cent, while riskier US oil futures dropped 4.4 per cent.

Across the Atlantic, investors on Wall Street sold steadily throughout the day, with the major indices off more than 3 per cent by mid-afternoon.

In Australia on Friday evening, Commonwealth Bank customers were unable to transfer currency to the UK as the bank suspended some of its forex services.

“We’re temporarily suspending foreign exchange of GBP due to results from the British exit referendum,” the bank tweeted, responding to customers who found their attempted transactions unsuccessful. The bank did not give a further timeframe for its action.

It calls up memories of the worst days of the European political crisis around Greece,” said Bo Christensen, chief analyst at Danske Invest.

Stocks had been on a steady uplift during the week, following a series of polls that suggested a victory for Remain. That enthusiasm continued through the day Thursday. By the time polls closed at 10 p.m. British time, gamblers had staked so many bets for Remain that betting exchange Betfair calculated a 94 per cent chance that the side would carry the day.

Then the counting started. A hairbreadth win for Remain in Newcastle, in the northeast of England, started to deflate the pound, as did reports of Leave victories in smaller districts. Sunderland, a Labour-leaning port city where anger at the EU runs high, reported a 61.3 per cent Leave tally. The pound slammed down, falling more than 3 per cent in minutes.

With Dow Jones newswires, AFP