FTSE 100 at lowest level since 2016 as Brexit progress boosts pound

(c) Sky News 2018: <a href="http://news.sky.com/story/ftse-100-at-lowest-level-since-2016-as-brexit-progress-boosts-pound-11297188">FTSE 100 at lowest level since 2016 as Brexit progress boosts pound</a>

The FTSE 100 is trading at levels not seen since December 2016 after a rally in the pound's value - a reaction to Brexit progress - added to a tough day for shares worldwide.

The London market closed 1.7% or 121 points down at 7,042 - making it the worst performer among its major European rivals as tech stocks came in to sharp focus.

Many big names in the sector were dragged lower as Facebook (NasdaqGS: FB - news) 's value came under pressure amid a fake news storm facing the company related to a data mining firm's use of Facebook profile information.

The fall in the FTSE 100's value was exacerbated by a recovery for sterling as investors reacted to news of progress in Brussels, where the broad terms were agreed for a Brexit transition deal between the EU and UK.

The news was also broadly welcomed by UK business groups - among them the CBI, whose director general, Carolyn Fairbairn, said: "Agreeing transition is a critical milestone that will provide many hundreds of businesses with the confidence to put their contingency planning on hold and keep investing in the UK."

While the pound enjoyed its best day against the dollar since January at one stage - climbing comfortably back above $1.40. It also gained against the euro.

Higher sterling has tended to hurt the value of many companies on the FTSE 100 since the EU vote, as they earn much of their revenues in foreign currencies and those are then damaged when they are converted to pounds.

The biggest loser in London was Micro Focus - losing almost half its market value by the close - after the UK's biggest tech firm warned on revenues and admitted its chief executive had quit .

The intense backlash from its shareholders contributed to rival stocks being spooked across Europe and the US though Facebook's troubles were seen as the main driver.

Its shares were almost 7% lower on Wall Street leaving them on track for their worst day for four years.

Google's parent, Alphabet (Xetra: ABEA.DE - news) , and Twitter (Frankfurt: A1W6XZ - news) were among other big tech names to feel the pain on the tech-heavy Nasdaq (Frankfurt: 813516 - news) .

Other sectors to have a tough day in London included retail as speculation continues to swirl about the fate of several well known names.

Shares (Berlin: DI6.BE - news) in Carpetright (Other OTC: CGHXF - news) and Mothercare (Other OTC: MHCRF - news) fell 21% and 14% respectively. Both chains have admitted tough trading recently, with the floor coverings chain reported, by the Sunday Times, to be considering a rescue plan involving store closures after it announced earlier this month it was considering a number of options.