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Asia: Markets fall on global uncertainty, pound holds rally

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[HONG KONG] Asian markets turned lower on Wednesday following a negative lead from Wall Street and Europe, with analysts saying Britain's shock decision to call a snap election added to global uncertainties.

The pound held on to its gains after Prime Minister Theresa May announced a snap poll for June 8 as she looks to cement a mandate heading into key Brexit talks with her EU counterparts.

The move comes as France prepares for the first round of its presidential elections at the weekend, while Germany is set for a vote this year, both of which could have huge implications for the future of the eurozone.

Added to that, said Greg McKenna, chief market strategist at AxiTrader, was the face-off between the US and North Korea and the cooling of relations between Washington and Moscow over the Syria crisis.

Mrs May's announcement "has added another layer of uncertainty for traders", McKenna added. "It all sounds dire at the moment."

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The news sent the pound surging more than two per cent against the dollar, which hammered London stocks the most since last June's referendum to leave the EU.

The FTSE fell 2.5 per cent, while the Dow sank 0.6 per cent on Wall Street.

By the end of the morning session in Tokyo the Nikkei index was flat.

Hong Kong slipped 0.5 per cent, Shanghai sank 1.2 per cent, Sydney lost 0.4 per cent and Singapore gave up 0.6 per cent. There were also losses in Taipei, Manila and Wellington.

Safe haven assets were also holding up as investors fret over the global outlook. Gold is up more than two per cent since Donald Trump ordered missile strikes on a Syrian airbase 12 days ago, sparking fears of a possible conflict with Russia, which is backing the Damascus regime.

The yen was also sitting around five-month highs against the dollar.

There was a "growing wait-and-see mood due to such uncertainties as the French election and British snap poll", said Okasan Online Securities chief strategist Yoshihiro Ito in a commentary.


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