Brexit-sensitive stocks sink on deal backlash, exporters gain

LONDON: British stocks slid on Thursday after Brexit minister Dominic Raab quit in a blow to Prime Minister Theresa May's efforts to win backing for her draft deal to exit the EU.

Housebuilders, retailers and banks all fell, dragging the FTSE 250 index down 1.1 percent, while the exporter-heavy FTSE 100 fell just 0.1 percent, supported by a plunge in the value of sterling against the euro and the dollar.

The resignations of Raab and pensions minister Esther McVey in protest at May's draft deal for leaving the European Union pushed sterling down 1.6 percent against the dollar amid raised expectations among traders of a second referendum, a "hard" Brexit and a general election.

In the FTSE 100, Housebuilder Barratt sank 8 percent, Persimmon and Taylor Wimpey fell 7 percent, and Berkeley Group lost 5.4 percent.

Mid-cap housebuilder Bovis Homes fell 8.2 percent, while Redrow and Crest Nicholson dropped by 5.5 percent and 5.3 percent respectively.

Barclays fell 6.2 percent and RBS 7.6 percent, with Lloyds down 4.4 percent as domestic banks were knocked by the heightened political uncertainty.

Retailers were also hit, with Marks & Spencer down 5.7 percent and Next down 5.4 percent.

Debenhams fell another 6.8 percent, after suffering its worst-ever day on Wednesday on a report high street suppliers are cutting ties with the department store group.

Paul Mumford, fund manager at Cavendish Asset Management, said there would "probably" be a few more resignations, increasing the uncertainty around the Brexit deal.

Mumford said investors were selling sectors they see as vulnerable to a messy Brexit and domestic political uncertainty, while others await more clarity.

Royal Mail shares made a u-turn from their positive open, trading down 5.6 percent by 1023 GMT after first-half profit dropped about 25 percent as costs weighed.

Shares in contractor Capita sank 8 percent, the worst FTSE 250 performer, after the Financial Times reported it faces the loss of its NHS deal after failing to send letters with cervical screening dates or test results.

Asset manager Intermediate Capital Group was a rare gainer on the mid-caps index, up 7.7 percent after its results showed a 17 percent increase in first-half assets thanks to strong inflows of new money from clients.

On the FTSE 100, multinational exporters Unilever, Diageo, Reckitt Benckiser, British American Tobacco, and Imperial Brands were up by 1.2 to 2.5 percent as they gained from the weaker pound.

Strong mining stocks helped limit losses, with Randgold Resources, Rio Tinto, Glencore, and BHP Billiton rising 1.2 to 4 percent on hopes of a rapprochement between the U.S. and China on trade.