By Emily Horton

London markets wobbled on Wednesday, as investors reacted to the bigger-than-expected defeat of U.K. Prime Minister Theresa May's Brexit plan.

Major oil companies led the losses.

How are the markets trading?

The FTSE 100 Index dipped 0.1% to 6,884.56 in early trading, after finishing up 0.6% on Tuesday.

Despite a brief dip to $1.2670 on Tuesday evening, the British pound managed to rebound strongly, rising to $1.2988 from $1.2860.

What is driving the markets?

May has suffered a crushing defeat to her EU withdrawal agreement, increasing the likelihood that the U.K. will have to delay its exit from the bloc or suffer a no-deal Brexit.

Politicians rejected May's Brexit deal by a majority of 432 to 202, a majority of 230, the biggest defeat ever record in U.K. parliamentary history. Jeremy Corbyn, leader of the opposition Labour Party, tabled a vote of no confidence on Tuesday, which May is expected to survive after a debate on the motion on Wednesday.

May now has until Monday, Jan. 21 to pull together an alternative agreement to present to parliament. She has vowed to engage with parliament in a bid to achieve this.

In the U.S., President Donald Trump's partial government closure continues. Marianne Lake, JP Morgan Chase & Co (JPM) chief financial officer, has warned the shutdown could hit investment banking fees (https://www.fnlondon.com/articles/jpmorgan-finance-chief-warns-us-shutdown-will-hit-revenues-20190115), bringing Wall Street's mergers and acquisitions bonanza to a crunching halt.

Meanwhile, Germany's sharp slowdown has stoked fears that China's economic woes are spreading globally, The Wall Street Journal reports (https://www.wsj.com/articles/germany-economy-slows-in-worrying-sign-for-global-growth-11547545471).

What stocks are active?

BP PLC (BP.LN) and Royal Dutch Shell Group PLC (RDSA.LN) both declined by more than 1%. Miner Fresnillo (FRES.LN) also dropped by over 1%.

Publisher Pearsons PLC (PSON.LN) fell 5.6% after narrowing its guidance.

British house builders were the big gainers in the FTSE 100: Taylor Wimpey (TW.LN) rose by 2% and Barratt London (BDEV.LN) gained just under 2%.

 

(END) Dow Jones Newswires

January 16, 2019 04:16 ET (09:16 GMT)

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