Footsie plunges as Brexit boost sends the City into a panic

A late flood of City money has backed Brexit as panic over a Leave vote plunged London’s FTSE 100 Index below 6000 for the first time in four months.

Betfair’s betting exchange showed nearly £2.7 million in wagers in the past 24 hours as the frenzy builds ahead of next week’s referendum. The biggest single bet was £27,500 on a Leave vote, Betfair said.

Although less than a quarter of Betfair’s total £28.5 million in bets so far have been on Brexit, a far bigger share of recent bets — almost half — are now backing Leave, pushing the chances of a Brexit to 42%, according to the company.

Graeme Sharpe, a spokesman for bookmaker William Hill, added: “Over 80% of the money in the last few days has been for Leave. It is very difficult to get people to back Remain.”

The betting surge came amid poll leads for Brexit and the backing of the Sun newspaper for an EU exit. The panic in markets pushed London’s FTSE 100 below 6000 for the first time since February.

The 81.21 point fall to 5,963.76 wiped more than £20 billion off blue-chip stocks, leaving the market 5% lower in the space of a week.

Chris Beauchamp, an analyst with spread betting firm IG Group, said the panic was “reminiscent to the build-up to the Scottish referendum”.

He warned the market could test year-lows below 5500 in the build-up to next week’s vote and added: “Clients are playing the trend — at the moment nobody is willing to come in and buy things.”

Sterling was also close to two-month lows as volatility hit record levels. The race to avoid the turmoil was such that the yield or return on German 10-year government debt turned negative for the first time — meaning that investors are effectively paying to lend to Germany for 10 years.

Brent crude oil slid back below $50 a barrel — down 69c to $49.66 — as PVM Oil Associates analyst Tamas Varga said “safe havens are back in fashion”.

He added: “The thought process is that if the UK leaves the EU, then the EU might slip back into recession and ... that might negatively impact oil demand.”

The International Monetary Fund meanwhile sounded another warning on Brexit earlier in Beijing as the world braces for next week’s vote.

David Lipton, first deputy managing director of the IMF, said: “It’s very hard to anticipate what those effects may be but that uncertainty would be a negative factor and come at a time when the global recovery remains slow and somewhat weak."

He added: “That kind of uncertainty would be unhelpful.”