June 13, 2016 / 8:42 AM / in 2 years

European shares drop to five-week low amid Brexit jitters

(ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report for more details)

* FTSEurofirst 300 down 0.9 pct

* Markets spooked by Brexit fears

* Banks, autos bear brunt of selling

* G4S drops after Orlando shooting

By Alistair Smout

LONDON, June 13 (Reuters) - A leading European share index fell to its lowest level in five weeks on Monday, hit by a sell-off in cyclical stocks and widespread unease in markets over a possible British exit from the European Union.

The pan-European FTSEurofirst 300 index fell 0.9 percent to 1,299.77 points, hitting its lowest since May 6 and extending the previous session’s 2.3 percent drop.

The STOXX Europe 600 was down 0.9 percent, also at its lowest level since May 6, having touched a two-month low in early deals.

European shares tracked Asia lower, following a risk-off pattern in global markets as investors positioned for central bank meetings this week and a referendum on Britain’s EU membership.

One poll out after the market closed on Friday gave the “out” campaign a 10 point lead, though two subsequent polls over the weekend painted a mixed picture over which side will win the June 23 vote.

Bookmakers still believe that the referendum is likely to result in a vote to remain in the EU, although the probability of an “in” vote has dropped 10 percentage points from last week.

Before then, the U.S. Federal Reserve, Bank of England, Swiss National Bank and the Bank of Japan are all expected to hold monetary policy steady against a backdrop of caution heightened by the Brexit issue.

“We’re in uncharted territory in front of the Brexit vote, and then there’s also the Fed this week. So the wall of worry is quite high at the moment. All the banks are a little bit lower, and they’re to ones which are likely to get hit,” said Zeg Choudhry, managing director at LONTRAD.

“For the next two weeks, you’ve got to be slightly mad if you’ve not got your money in defensive stocks.”

Cyclical stocks - sensitive to economic shifts - were the top fallers, with the auto and bank sectors down 1.5 and 1.3 percent respectively.

Commodity stocks also came under pressure, with miners down 1.3 percent and oil and gas shares down 1 percent.

Brent crude prices dipped below $50 a barrel for the first time in a week, hit by a darkening economic outlook.

Among individual movers, G4S was a top faller on the STOXX 600, down 6.6 percent after Sunday’s Orlando nightclub shootings.

Omar Mateen, who killed 50 people at a packed gay nightclub in Florida on Sunday, was employed by G4S and had undergone company screening in 2013 with “no findings,” G4S said Sunday.

Traders and analysts said that it would dent G4S’ reputation in the United States, where it generates a substantial proportion of its revenue.

Today’s European research round-up

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA.

editing by John Stonestreet

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