London’s FTSE 100 hit its lowest level in two weeks on Thursday, as the pound’s rebound on currencies markets knocked stock in overseas revenue earners.

Shares in WPP, the international advertising agency and a major dollar earner, were among the biggest fallers, down 2.5 per cent. Pearson, the former owner of the FT and a big figure in US education markets, fell 1.4 per cent.

Vodafone, the global mobile telecoms stock, dropped by around 2 per cent. It also announced the merger of its Vodafone Hutchison Australia unit with TPG Telecom.

A stronger pound makes it more expensive for multinationals to repatriate revenue into sterling, while a weaker currency makes sterling-denominated exports cheaper.

Overall, the UK’s main stock index fell by 0.6 per cent to 7,516.72, leaving it around levels last touched in mid August.

Property stocks were also notable fallers after a broad note on the sector from Morgan Stanley, in which the bank said it expected lower returns “for almost every property stock in Europe.”

The note, from Bart Gysens, analyst, said:

Rising inflation and higher bond yields will trigger increasing differentiation in property yields, we believe; the biggest changes in price targets we are making mainly relate to shopping centre real estate investment trusts for which we now assume more yield expansion.

We continue to shy away from optically cheap stocks — [with] wide net asset value discounts and/or elevated earnings yields, often in the UK and/or with retail exposure.

British Land fell by over 1 per cent, while Land Securities fell 1.9 per cent.

French shopping centre company Klépierre fell 4.8 per cent while Germany’s largest listed commercial landlord Aroundtown fell by over 2 per cent.

The Europe-wide Stoxx 600 fell 0.4 per cent, with Frankfurt’s Xetra Dax 30 down 0.6 per cent and the CAC 40 down 0.5 per cent in Paris.

Asset manager GAM fell by 12 per cent in afternoon trade after analysts at Credit Suisse slashed their target price in half. The Swiss company outlined earlier this week how it would start returning assets to investors from its absolute return bond funds that it had previously frozen after redemption requests surged in the wake of the removal of portfolio manager Tim Haywood in late July.

Sweden’s Elekta, which makes equipment used in radiation therapy, fell by over 8 per cent after its first quarter operating profit missed forecasts. Nonetheless, the company left its full-year guidance in place after forward orders rose ahead of expectations.

Concern at a potential worsening of relations between Air France-KLM and the unions representing its staff hit its shares, which fell by around 7 per cent. The company faces a deepening wages dispute.

Back in London, shares in Hunting strode to the top of the mid-cap index after the oilfield support services provider returned to profit for the six months to June 30. The company also resumed dividend payments. The stock added 13 per cent to levels last seen in early June.

“The North American market is the driving force behind [Hunting’s] improved numbers. Boosted by shale activity, there is very strong US demand for Hunting’s perforating gun, a device used to penetrate oil and gas wells in preparation for production

Russ Mould, investment director at AJ Bell

Overall, the FTSE 250, which is less exposed to currency effects than the FTSE 100, slipped 0.1 per cent.

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