FTSE CLOSE: Footsie falls below 6,000 for the first time since February while the pound slides on Brexit fears

17.40: The FTSE 100 closed down 121.44 points at 5923.53 as the rising chances of a Brexit vote sparked a flight to the safety of government bonds, the US dollar and the Japanese yen.

Opinion polls pointing to an increased likelihood of the UK leaving the European Union have dominated financial markets in recent days, with even a pending US interest rate decision by the Federal Reserve playing a more minor role than usual.

'Brexit is adding fuel to the fire for risk averse investors. Markets are already worried about slowing global growth and the inability of central bank policy to stem the decline,' said Jasper Lawler of CMC Markets. 'The June 23 EU referendum gives a specific date when all the market’s troubles could come to a head.'

Brexit campaign: Opinion polls pointing to an increased likelihood of the UK leaving the European Union after the 23 June referendum have dominated financial markets in recent days

Brexit campaign: Opinion polls pointing to an increased likelihood of the UK leaving the European Union after the 23 June referendum have dominated financial markets in recent days

'Stocks and the British pound are being shunned in favour of havens like German and British bonds, the yields of which have struck new record lows.

'Expectations of weak global growth and ever-enduring easy monetary policy, likely to be reinforced at central bank meetings this week, is seeing a mass exit from equities and feeding demand for bonds, sending yields to record lows.

'Sky high demand for fixed income has sent German 10 year bund yields [interest rates on government debt] negative for the first time in history. "Fixed Income" has taken another leap towards "Fixed Expenditure".

'General risk aversion has sent the FTSE 100 below 6000 for the first time since February with a drop in mining, banking and homebuilder shares contributing the most to the decline.'

He added: 'The British pound was again centre of the foreign exchange universe, slumping for the fourth day in five after the Sun newspaper came out in favour of Brexit and another poll showed the "Leave" camp ahead.'

Joshua Mahony of IG said: Yet another day in the red for European markets has seen fears surrounding a potential Brexit continue to restrain risk appetite.

'The flight to safety is clearly evident in FX markets, with money moving out of European currencies and into distant havens such as the yen and dollar. With the news that Germany has joined the negative 10-year club, it is clear that investors are looking for a shelter from the storm that is moving in over the next two weeks.

'Yet another EU referendum poll has hammered home the increasing threat of a Brexit next week, with the TNS poll coming out heavily in favour of the UK leaving the EU today. What initially looked like an anomaly, has turned into the norm, with eight of the last 10 polls coming out in favour of a Brexit.'

The wider market falls were compounded by sliding oil prices, with benchmark London Brent crude 1.3 per cent lower at $49.70 as a report pointed to an increase in US shale production next year.

With this week's US interest rate decision also in sharp focus, the Dow Jones was down 0.66 per cent, while the CAC 40 in France sank by 2.17 per cent and Germany's DAX fell 1.28 per cent.

Heavyweight financial firms sank deep into the red as investors took fright amid fears of slowing global growth and a British exit from the EU.

Barclays was under pressure after a report from analysts at Jefferies suggested it was the UK bank that would be hit hardest by a vote to leave the EU, sending shares down more than 3 per cent, off 5.1p to 160.1p. The lender is thought to be the most exposed through investment and corporate banking.

Worldpay slipped 8.9p to 265.9p, while Lloyds Banking Group was 2.1p lower at 62.2p.

Housebuilders were also in the red, despite Crest Nicholson brushing aside concerns over the EU referendum and posting a 25 per cent rise in pre-tax profits to £72.6million for the first half of the year.

It said while there would be a risk of 'disruption' following a Brexit vote, there was still strong demand from house buyers.

Shares in Crest fell 7 per cent or 39.5p to 520.5p in the FTSE 250, while its top tier rivals were also heavily lower.

Berkeley was 4 per cent or 130p down at 2990p, Barratt Developments fell 20p to 516.5p and Taylor Wimpey was 6.6p lower at 173.1p.

Elsewhere, transport giant FirstGroup surged 6 per cent or 6.2p to 109.3p as it predicted a year of 'strong progress' after a tough past financial year, when it was hit by the loss of rail franchises.

But shares in Go-Ahead have plunged more than 13 per cent after the transport group warned that strikes and upgrade works would deal a blow to its rail business. Shares were down 326.2p to 2106.8.

Sterling, which hit two-month lows against the US dollar and euro on Monday, dropped by 0.8 per cent to $1.41.

Lower-than-expected inflation figures also did little to support sterling, with the Consumer Prices Index unchanged at 0.3 per cent in May against forecasts for a rise to 0.4 per cent. The pound saw a 0.1 per cent rise against the euro at €1.26.

There was only one riser on the FTSE 100 Index, Ashtead Group, up 28.5p to 985.5p. The biggest fallers were Anglo American, down 35.9p to 599.5p, Antofagasta, down 22.1p to 394.5p, Sky, down 41.5p to 850p, and Berkeley, down 130p to 2990p.

17.01: The FTSE 100 closed down 121.44 points at 5923.53. More to come. 

14.40: The Footsie stayed weak in afternoon trading after below-forecast UK inflation data added to the ongoing fears over a possible Brexit vote next week, but US stocks were mixed early on despite some uncertainty ahead of the latest US Federal Reserve monetary policy decision tomorrow.

With around an hour and three quarters of trading to go in London, the FTSE 100 index was 65.4 points, or 1.1 per cent lower at 5,979.6, off the day's low of 5,959.35 but staying below the 6,000 barrier surrendered today for the first time in nearly four months.

The UK blue chip index has shed more than 330 points – around 5 per cent - since the market close last Wednesday as Brexit fears have gripped global financial markets.

But on Wall Street, after initial sharp opening falls, the blue chip Dow Jones Industrial Average recovered to be down just 15.3 points at 17,717.1, while the broader S&P 500 index ticked up 0.3 points at 2,079.4, and the tech-laden Nasdaq composite gained 8.4 points at 4,856.8.

Fed watch: US stocks remained cautious at the start of the two-day Fed policy meeting, but solid US retail sales provided underlying support, indicating that the economy still looks robust despite weak jobs data

Fed watch: US stocks remained cautious at the start of the two-day Fed policy meeting, but solid US retail sales provided underlying support, indicating that the economy still looks robust despite weak jobs data

US stocks remained cautious at the start of the two-day Fed policy meeting, but some solid US retail sales data provided underlying support, indicating that the economy still looks robust despite the recent weak May jobs report.

US retail sales rose 0.5 per cent in May, after an even larger gain in the prior month, above forecasts for an increase of 0.3 per cent.

David Morrison, Senior Market Strategist at Spreadco., said: ‘These are the first major US economic data release since the dismal Non-Farm Payroll number at the beginning of the month.

‘Of course, thanks to the payrolls and Janet Yellen’s hawkish speech a week ago, there’s no expectation of a rate hike after tomorrow’s Fed meeting, and these Retail Sales numbers do nothing to change that.

‘However, the FOMC will also release its latest summary of economic projections. This could be market-moving as it includes an update on Fed members’ projections for future rate hikes.’

European markets stayed lower, with France’s CAC 40 index down 1.6 per cent and Germany’s Dax 30 index off 0.7 cent after the yield on the 10-year German Bund, Europe's benchmark government bond, fell below zero for the first time today.

Meanwhile yields on the British 30-year government bond fell to a new record low below 2 per cent after the below-forecast UK inflation data added to the flight to safe haven assets driven by uncertainty about next week's EU membership referendum.

UK annual consumer price inflation was 0.3 per cent in May, according to the Office for National Statistics, unchanged from April but below forecasts for 0.4 per cent.

On currency markets, the pound remained near two month lows against the dollar, weighed by the subdued inflation numbers, and heightened worries about a possible Brexit vote in the June 23 referendum.

In late afternoon trade, the pound was down 0.7 per cent versus the dollar at $1.4170, but it held off lows against the euro, down 0.2 per cent at €1.2612.

A pair of ICM polls for The Guardian - one telephone the other online - had Leave ahead by 53 per cent to 47 per cent if the "don't knows" are excluded. This echoed the findings of polls by YouGov and for the Bruges Group over the weekend. 

12.30: The Footsie and the pound remained lower at lunchtime after below-forecast UK inflation data added to the ongoing fears over a possible Brexit vote in next week’s EU referendum and uncertainty ahead of the US Federal Reserve’s latest monetary policy decision tomorrow.

By mid session, the FTSE 100 index was 70.7 points, or 1.2 per cent lower at 5,974.2, dropping below the 6,000 barrier for the first time in nearly four months.

The UK blue chip index has shed more than 330 points – around 5 per cent - since the market close last Wednesday as Brexit fears have gripped global financial markets.

US stock index futures signalled further falls today in New York, following a triple-digit slide by the Dow Jones Industrials overnight, with investors cautious ahead of the start of the two-day Fed policy meeting, and with US retail sales data due for release today.

Big falls: The UK blue chip index has shed more than 330 points – around 5 per cent - since the market close last Wednesday as Brexit fears have gripped global financial markets

Big falls: The UK blue chip index has shed more than 330 points – around 5 per cent - since the market close last Wednesday as Brexit fears have gripped global financial markets

Ana Thaker, Market Economist at PhillipCapital UK, said: ‘Whilst strong retail sales are unlikely to make up for the poor nonfarm payroll figures at the start of the month, better than expected sales could see some renewed optimism for the US economy.’

In Europe, France’s CAC 40 index shed 1.5 per cent and Germany’s Dax 30 index lost 0.8 cent, while the yield on the 10-year German Bund, Europe's benchmark government bond, fell below zero for the first time today.

Meanwhile yields on British 30-year government bond fell to a new record low below 2 per cent after today’s below-forecast UK inflation data added to the flight to safe haven assets driven by uncertainty about next week's EU membership referendum.

UK annual consumer price inflation was 0.3 per cent in May, according to the Office for National Statistics, unchanged from April but below forecasts for it to edge up to 0.4 per cent.

On currency markets, the pound stayed near two month lows against the dollar, weighed by the subdued inflation numbers, and heightened worries about a possible Brexit vote in the June 23 referendum.

At lunchtime, the pound was down 0.8 per cent versus the dollar at $1.4163, but it came off lows against the euro, only losing 0.1 per cent at €1.2625.

A pair of ICM polls for The Guardian - one telephone the other online - had Leave ahead by 53 per cent to 47 per cent if the "don't knows" are excluded. This echoed the findings of polls by YouGov and for the Bruges Group over the weekend.

Furthermore, the UK's most widely read newspaper, The Sun, committed its support to the Leave campaign in an editorial today.

Among equities, heavyweight miners were lower as the price of copper fell, with Brexit and Fed meeting worries exacerbated by concerns over economic growth from top commodities consumer China.

The International Monetary Fund said today that China needs to implement reforms with more urgency as the economy faces growing vulnerabilities and there are fewer buffers to deal with any shocks.

Anglo American was the top FTSE 100 faller, down 3.3 per cent, or 21.2p to 614.2p, while BHP Billiton shed 19.1p at 804.3p, and Rio Tinto lost 16.0p at 1,935.5p.

A weaker oil price weighed on energy stocks, with BP 6.4p lower to 362.6p and Royal Dutch Shell A shares off 30.5p to 1,741.5p as Brent crude fell back below $50 a barrel, down 1.4 per cent at $49.64 at lunchtime.

Financial stocks were weak as well as the Brexit worries and the impending Fed interest rates knocked bond yields.

Barclays dropped 3 per cent, or 5.0p to 160.2p after analysts at broker Jefferies International yesterday suggested that the firm is the bank most exposed to the referendum, as its international operations will be hit hardest by a Brexit.

Housebuilders also suffered from Brexit fears, despite mid cap Crest Nicholson brushing aside concerns over the EU referendum and posting a 25 per cent rise in first half pretax profits to £72.6million.

Crest boss Stephen Stone said that while there would be a risk of ‘disruption’ following a Brexit vote, there was still strong demand from house buyers.

Shares in Crest fell 6.4 per cent or 36p to 524p, while blue chip Berkeley Group shed 3 per cent, or 104p to 3,016p, Barratt Developments fell 17.0p to 519.5p, and Taylor Wimpey was 5.2p lower at 174.5p.

Among just five FTSE 100 gainers, Ashtead Group was the top performer, jumping 2 per cent or 19p higher to 976p after the equipment rental specialist announced plans to return £200million to shareholders via a share buyback in the current financial year as it reported surging full tear profits and revenue and a higher dividend. 

10.15: The Footsie and sterling extended their falls as the morning session progressed after weaker than expected UK inflation data added to ongoing fears over a possible Brexit vote in next week’s EU referendum and uncertainty ahead of the Federal Reserve policy meeting which kicks off today.

By mid morning, the FTSE 100 index was 78.8 points, or 1.0 per cent lower at 5,968.2, taking its falls over the past three sessions to over 250 points and dropping below the 6,000 level for the first time in nearly four months.

European markets were also weak, with France’s CAC 40 index and Germany’s Dax 30 index both dropping over 1.3 per cent.

Glum: The Footsie and sterling extended their falls as the morning session progressed after weaker than expected UK inflation data added to ongoing fears over a possible Brexit vote in next week’s EU referendum

Glum: The Footsie and sterling extended their falls as the morning session progressed after weaker than expected UK inflation data added to ongoing fears over a possible Brexit vote in next week’s EU referendum

On bond markets, the yield on the 10-year German Bund, Europe's benchmark government bond, fell below zero for the first time today as worries about a potential UK exit from the EU sent investors rushing for safe-haven assets.

Meanwhile yields on the British 30-year government bond fell to a new record low below 2 per cent after the below-forecast UK inflation data added to demand driven by uncertainty about the EU membership referendum.

UK annual consumer price inflation was 0.3 per cent in May, according to the Office for National Statistics, unchanged from April but missing expectations for it to edge up to 0.4 per cent.

Meanwhile factory gate prices fell 0.7 per cent on the year, worse than forecasts for a 0.5 per cent drop.

On currency markets, sterling extended its falls following the inflation numbers, remaining depressed once again by heightened worries about a possible Brexit vote in the June 23 referendum.

A pair of ICM polls for The Guardian - one telephone the other online - had Leave ahead by 53 per cent to 47 per cent if the "don't knows" are excluded. This echoed the findings of polls by YouGov and for the Bruges Group over the weekend.

Furthermore, the UK's most widely read newspaper, The Sun, committed its support to the Leave campaign in an editorial today.

 Chris Beauchamp, Senior Market Analyst at IG, said: 'The move in the polls has been matched by a noticeable shift in the IG Brexit binary, with clients now thinking that the chance of the UK voting to leave has now hit 40.5 per cent, up from the low 30s yesterday.

'What is interesting is, despite the sharp selloff in sterling in recent days, the pound is still holding on above $1.41.. Either this is a symptom of limited volumes as traders abandon the field, or a sign that the market still thinks the status quo will win out in the end.'

In mid morning trade, the pound was down 1.0 per cent versus the dollar to $1.4136, and fell 0.5 per cent against the euro to €1.2578. 

Among equities, financial stocks were weak as Brexit worries and the impeding Fed policy decision knocked bond yields.

Barclays dropped 2.1 per cent, or 3.6p to 161.6p after analysts at broker Jefferies International yesterday suggested that the firm is the bank most exposed to the referendum, as its international operations will be hit hardest by a Brexit.

Heavyweight miners were also lower as the price of copper fell, with Brexit and Fed meeting worries exacerbated by concerns over economic growth in top commodities consumer China.

The International Monetary Fund said today that China needs to implement reforms with more urgency as the economy faces growing vulnerabilities and there are fewer buffers to deal with any shocks.

Anglo American was the top FTSE 100 faller, down 4 per cent, or 25.3p to 610.1p, while BHP Billiton shed 20.9p at 802.5p, and Antofagasta lost 8.8p at 407.8p.

And a weaker oil price weighed on energy stocks, with BP 1.9p lower to 367.0p and Royal Dutch Shell A shares off 23.5p to 1,748.5p as Brent crude dipped back below $50 a barrel, down 1.3 per cent at $49.68.

But among the handful of FTSE 100 gainers, Ashtead Group was the top performer, jumping 2.3 per cent or 22p higher to 979p after the equipment rental specialist announced plans to return £200million to shareholders via a share buyback in the current financial year as it reported surging full tear profits and revenue and a higher dividend.

Revenue growth was driven by the beneficial impact of the stronger dollar, given Ashtead's significant exposure to the US market through its Sunbelt division, and by robust markets throughout the year.

On the second line, Premier Farnell shot 50 per cent higher, up 54.75p to 164.00p after it agreed to an all-cash 165p a share takeover offer from Swiss manufacturing company Datwyler Holding, that values the maker of the Raspberry Pi mini-computer at £615million.

Fashion retailer Ted Baker was also a mid cap riser, adding 2.3 per cent, or 54p to 2,379p after it reported an 11 per cent year-on-year rise in group revenue for the 19 weeks to May 30, with retail sales up 13 per cent sales and online sales jumping 32 per cent.

And transport operator FirstGroup added 9.8 per cent, or 10.1p at 113.2p as it said it was set to make ‘strong progress’ despite ongoing tough trading which saw its saw its full year underlying earnings slip by 1 per cent hit by the loss of rail franchises.

But buses and rail peer Go-Ahead Group was the biggest FTSE 250 faller, dropping 12 per cent, or 295p to 2,1389p as it highlighted more difficult conditions for its bus operations in the fourth quarter and a hit to margins on its GTR rail contract, which includes the Thameslink franchise, although it still affirmed its full year expectations. 

08.20: The Footsie fell back again in early trading, tracking overnight drops by US and Asian markets amid ongoing fears over a Brexit vote in next week’s EU referendum and with the latest Federal Reserve policy meeting kicking off today, and the latest UK inflation data to digest later.

In opening deals, the FTSE 100 index was down 28.0 points, or 0.5 per cent at 6,017.0, having closed 70.79 points lower yesterday, extending Friday’s over 100 point drop as traders threw what one City pundit described as a 'pre-referendum tantrum'.

US stocks tumbled again overnight, with another triple-digit drop by the Dow Jones Industrial as investors cautiously await tomorrow’s night’s US monetary policy decision, although the Fed is seen as unlikely to make any changes to interest rates this time out.

Further falls: The Footsie fell back again in early trading, tracking overnight drops by US and Asian markets amid ongoing fears over a Brexit vote next week and with the latest Fed policy meeting kicking off today

Further falls: The Footsie fell back again in early trading, tracking overnight drops by US and Asian markets amid ongoing fears over a Brexit vote next week and with the latest Fed policy meeting kicking off today

Asian markets sunk too, weighed by a firmer yen, weak oil prices with Brent crude dipping back below $49 a barrel, and concerns over China’s economic growth.

The International Monetary Fund said today that China needs to implement reforms with more urgency as the economy faces growing vulnerabilities and there are fewer buffers to deal with any shocks.

Connor Campbell, Financial Analyst at Spreadex, said: ‘There seems to be no sign that the pre-referendum jitters are going to disappear this Tuesday, with the European indices once again falling at the open.’

He added: ‘The latest Guardian/ICM survey has the Leave campaign with a 6 point advantage, with polls from the ORB/Telegraph and YouGov/Times suggesting similar leads for Boris Johnson and co. Perhaps most damning is the fact that The Sun this morning came out in favour of a Brexit with a flashy and trashy editorial on the reason why Britain should quit the EU.

‘The Brexiters have begun to dominate the conversation at the key time, and as shown by the market reaction there is a genuine fear that Europe is on a collision course with history.

‘In among all this Brexit-angst there is a bit of data to deal with, namely the latest UK inflation reading. Analysts are expecting the figure to rise from 0.3 per cent to 0.4 per cent month-on-month, something that may give the pound a boost but, then again given the strength of the Brexit fears, may not.‘

In early trading on currency markets, the pound was depressed once again by the Brexit worries, shedding 0.9 per cent versus the dollar to $1.4143, and down 0.6 per cent against the euro at €1.2555.

Stocks to watch in London include:

PREMIER FARNELL – Swiss firm Daetwyler Holding has agreed to buy the FTSE 250-listed electronic components distributor in an all-cash deal valuing the UK firm at just over Sfr1billion (£615million).

TED BAKER – The fashion retailer has posted an 11.3 per cent increase in revenues in the first quarter, shrugging off fears of a high street slowdown. The firm said retail sales rose 12.7 per cent, while online transactions rocketed by 32.3 per cent, as it hailed the strength of its brand in ‘challenging external trading conditions’.

CREST NICHOLSON – The housebuilder has reported a 7 per cent rise in housing completions in the first half of its financial year, saying demand for new homes rose despite Britain's pending EU referendum.

ASHTEAD – The equipment hire firm has announced a share buyback of up to £200million for the current financial year, after strong North American growth helped it post a rise in full year profit.

FIRSTGROUP – The transport operator has reported a 1 per cent fall in underlying earnings to £300.7million for the year to March 31, with revenues dropping by 13.8 per cent after it lost key rail franchises, while its First Student business was impacted by the timing of the school calendar.

UK company news scheduled today includes:

Trading update: Ted Baker

Finals: Ashtead Group, Firstgroup, Findel, Halma, Abenza, CML Microsystems, Norcros, Trifast, Market Tech Holdings, Park Group, Shield Therapeutics, Falkland Island Holdings

Interims Crest Nicholson, Servoca, Elegant Hotels

Economic news scheduled today includes:

UK CPI, RPI, PPI inflation at 9.30am

ONS house prices at 9.30am

eurozone industrial production ay 10am

US retail sales at 1.30pm

US import prices at 1.30pm

US business inventories at 3pm