Pound slides on fears over May's future

Global stocks opened the week with a bout of unease on Monday as European stocks drifted downwards and Wall Street narrowly eked out a positive finish amid fears over the long-awaited corporate tax cuts.

Meanwhile, the British pound sank on uncertainty surrounding Prime Minister Theresa May's political future, dealers said.

The pressure on sterling came after reports that dozens of MPs in the ruling Conservative Party were backing a move to oust May, whose leadership has been battered by scandals and crises.

In New York, the major indices finished essentially flat, ending a two-day losing streak but showing the bullish attitudes have dimmed as complications mount in Republican efforts to enact a sweeping tax overhaul eagerly anticipated by Wall Street.

"I don't think investors are expecting a lot from this Congress," Maris Ogg of Tower Bridge Advisors told AFP. "I don't think we're going to get tax reform."

Market players got a bit of a boost from news the Senate Banking Committee reached a bipartisan agreement to ease the regulatory burdens on smaller community banks.

But investors also soured on a restructuring plan unveiled by embattled industrial giant General Electric, which cut dividends in half. The company's stock nosedived more than seven percent to its lowest price in more than five years.

- A weakened British premier -

The pound fell as far as $1.3062 in the European morning -- dangerously close to the $1.3050 level that pessimists believe would trigger a sustained sell-off. But the currency managed to claw back some of its losses by the end of the day.

London's benchmark FTSE 100 index of blue-chip firms got an early boost from the weaker pound, seen to be positive for multinationals, but eventually joined Europe's downward drift, losing 0.2 percent.

Frankfurt and Paris finished down 0.4 percent and 0.7 percent, respectively.

London is under pressure to meet a two-week deadline set Friday by the EU's chief Brexit negotiator Michel Barnier for a deal on exit terms ahead of a December EU summit.

"Clearly the Brexit negotiations are at a crucial juncture," noted Rabobank analyst Jane Foley. "However, without a majority May's leadership has been weakened and she appears unable to rally her cabinet behind her."

In recent weeks, many major world markets have surged -- with Wall Street hitting several records and Tokyo touching a 26-year high -- on optimism about the global economy and a series of strong corporate earnings.

But investors have started to cash in as worries begin to emerge about high share valuations and the fate of the US tax cuts.

- Key figures around 2200 GMT -

New York - DOW: FLAT at 23,439.55 (close)

New York - S&P 500: UP 0.1 percent 2,584.84 (close)

New York - Nasdaq: UP 0.1 percent 6,757.60 (close)

London - FTSE 100: DOWN 0.2 percent at 7,415.18 points (close)

Frankfurt - DAX 30: DOWN 0.4 percent at 13,074.42 (close)

Paris - CAC 40: DOWN 0.7 percent at 5,341.63 (close)

EURO STOXX 50: DOWN 0.5 percent at 3,574.52 (close)

Tokyo - Nikkei 225: DOWN 1.3 percent at 22,380.99 (close)

Hong Kong - Hang Seng: UP 0.2 percent at 29,182.18 (close)

Shanghai - Composite: UP 0.4 percent at 3,447.84 (close)

Pound/dollar: DOWN at $1.3116 from $1.3193 at 2200 GMT Friday

Euro/dollar: FLAT at $1.1665

Dollar/yen: UP at 113.63 yen from 113.50 yen

Oil - Brent North Sea: DOWN 36 cents at $63.16 per barrel

Oil - West Texas Intermediate: UP two cents at $56.76

Source: AFP