Pound's jump unsettles London shares

Trader at ETX Capital in London Image copyright Getty Images

The FTSE 100 closed down amid worries over the impact of a stronger pound and concerns that US President Donald Trump faces opposition to promised reforms.

Sterling rose 1% against the dollar to $1.2490 after UK inflation in February rose to 2.3%, driven by rising fuel and food prices.

The stronger pound weighs on companies that earn their income abroad.

At the close, the FTSE 100 was down 0.69% at 7,378.34 points, with mining companies the top five fallers.

Glencore was the biggest casualty, falling 4.24%, followed by Rio Tinto and BHP Billiton, each down about 4%.

However, another miner, Fresnillo led the risers with a 1.64% jump. The gold miner benefitted from a rally in the precious metal's price, which is now at a three-week high.

The London market has risen for the past four trading sessions in a row, notching up three record closes along the way.

However, sterling's rise to its highest level since 23 February has raised worries about how it may hurt profits when London-listed multinationals repatriate profits back to the UK.

Connor Campbell, financial analyst at Spreadex, said: "The pound's post-inflation increase boost continued into the afternoon, creating a heavier and heavier weight for the FTSE.

"It will be now interesting to see whether the pound can maintain these gains as attention shifts to next week's triggering of Article 50, or whether its current highs merely give it more room to fall."

The mid-cap FTSE 250 index hit a record high in early trading, before turning negative. The index ended down 0.86% at 18,988 points.

Across Europe, Germany's Dax was down 0.7% and the Cac 40 in France was 0.2% lower.

On the oil markets, the price of Brent crude was down 0.7% at $51.24 a barrel, with traders left unconvinced by the possibility of Opec extending output cuts beyond June.