By Emily Horton
London stocks fell Tuesday, as crude oil prices dropped to a fresh low and investors wait nervously for the start of the two Federal Open Market Committee meeting in the US.
The U.K. government’s opposition’s attempt to call another leadership vote to challenge the Prime Minister Theresa May was brushed off by the pound.
Oil and energy led the decliners.
What did markets do?
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.14% declined 0.5% to 6,741.89, after finishing down 1% on Monday.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.2208% rose to $1.2694 from $1.2617 late Monday in New York.
What is driving the markets?
Crude prices dropped to fresh lows on Tuesday, in a third-straight session of losses as investors continued to fret over signs of rising U.S. supply.
A strong sterling was also keeping U.K. stocks pinned down, as the index’s multinational companies generate most of their sales in other currencies. Sterling shrugged off the Labour Party’s attempt to call a vote of no confidence in U.K. Prime Minister Theresa May’s leadership. The delayed parliamentary Brexit deal vote will take place in the week of Jan. 14.
The pound rose as the U.S. dollar pulled back ahead of the outcome of the Federal Open Market Committee meeting. Investors remain nervous ahead of that gathering amid fears the central bank may be too hasty with an expected interest-rate hike.
Despite a volatile session on Wall Street on Monday, U.S. stock futures moved cautiously higher on Tuesday.
What stocks are active
As oil tumbled, shares of Premier Oil PLC /zigman2/quotes/200314882/delayed UK:PMO +0.38% falling by 2.1% and BP PLC /zigman2/quotes/207305210/composite BP -4.75% dropped 1%. Shares of Royal Dutch Shell PLC /zigman2/quotes/206428183/delayed UK:RDSA -0.11% were down almost 2%, after reports the company may be in talks to buy Endeavor Energy Resources LP for around $8 billion.
The National Grid PLC declined by 4%.