British financial assets fall as politicians scramble for power

[Joanne98]

LONDON (MarketWatch) -- British stocks, bonds and the pound all declined on Friday, as politicians scrambled to grab the levers of power following one of the most closely contested general elections in decades.

The FTSE 100 index (LSE:UK:UKX) lost 0.5% to 5,237.48, and the mid-cap FTSE 250 dropped 2.6% to 9.648.10 after a night of turmoil on Wall Street. See Europe Markets.

The FTSE 250 has companies more exposed to the U.K. economy, and a number of these dropped Friday, with television broadcaster ITV (LSE:UK:ITV) moving down 5.2%, car dealer Inchcape (LSE:UK:INCH) down 3.9%, bookmaker William Hill (LSE:UK:WMH) down 4% and housebuilder Barratt Developments (LSE:UK:BDEV) down 7.5%. ITV separately said first-quarter revenue rose 6%.

It wasn't just stocks under pressure but bonds and sterling as well.

The yield on two-year U.K. government bonds rose 4 basis points to 1.11% and the yield on 10-year maturities rose 12 basis points to 3.87%. Bond prices move inversely to their yields.

Sterling (CURR:CUR_GBPUSD) fell 1.4% against the dollar to change hands at $1.4673.

The asset losses followed news that Britain's Conservatives won the most seats in Parliament, but fell short of the outright majority in the House of Commons needed to guarantee that they form the next government and end 13 years of Labour rule. See full story.

"With all the concerns about global sovereign debt the overwhelming view is that we need a strong government with a mandate to tighten fiscal policy. A government without an outright majority will find it difficult to do that," said Adam Cole, foreign-exchange strategist at RBC Global Markets.

"The election outcome as it stands looks to me to be about as negative a combination as you could have got," he added.

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