World stock markets shaken

The pound plunged and world stock markets slumped yesterday after Britain's shock vote to leave the European Union, fuelling a wave of global uncertainty.

Sterling crashed 10 percent to a 31-year low at one point and the euro also plummeted against the dollar, as the Brexit result caught markets by surprise.

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European stocks went into free fall at the opening, mirroring a rout in Asian markets, after traders had banked in the run-up on Britain opting to remain in the EU based on polls and bookmakers' predictions.

London's benchmark FTSE-100 index plummeted 7.5 percent after opening but began to recover some of the losses after British Prime Minister David Cameron said he would step down.

In midafternoon trading, London stocks were around three and a half percent down. But its eurozone counterparts, Frankfurt and Paris, both fell much more as financial stocks took the biggest hit.

US stocks slipped more than two percent.

UniCredit Research economist Daniel Vernazza said British voters had snubbed warnings by "the overwhelming majority of expert economic opinion".

"Not surprisingly, this morning the referendum result has sent shock waves through global financial markets," he said in a note to clients.

After rallying above $1.50 at the time voting ended, the pound steadily crumbled to its lowest level since 1985, at $1.3229 at one point, before unwinding some losses.

Capital Economics' John Higgins said the rebound came as "the rhetoric of pro-Remain policymakers has changed from 'Project Fear' to 'Project Reassure' and it has dawned on investors that a long period of negotiation, rather than sudden upheaval, now lies ahead".

But investors were still clearly wrong-footed by the vote outcome. European stock markets and the pound had gained steadily in the run-up to the referendum.

"It's scary, and I've never seen anything like it," James Butterfill, head of research and investments at ETF Securities, said in London. "A lot of people were caught out, and many investors will lose a lot of money," he told Bloomberg News.

Highlighting the uncertainty, US investment bank JPMorgan Chase warned that it could relocate UK jobs abroad.

Fears are also growing that other EU members will push for referendums, posing the biggest threat to the future of the grouping since its inception almost 60 years ago.

That worry pushed stock markets in the eurozone's weaker southern economies of Italy, Spain and Greece even lower than their core counterparts. Athens was more than 13 percent down.

"Leave's victory has delivered one of the biggest market shocks of all time," said Joe Rundle, head of trading at ETX Capital.

The dollar slumped briefly to 99.02 yen, the first time it has gone below 100 yen since November 2013, before edging back up above 102 yen. The Japanese unit is considered a safe bet in times of uncertainty and turmoil.

Global central banks sought to reassure financial markets and finance ministers of the Group of Seven industrial powers were swift to confer.

The European Central Bank said it was ready to provide additional liquidity for the markets if necessary, while the Bank of England said it would pump more than 250 billion pounds ($370 billion, 326 billion euros) into the financial system if needed.

The Swiss central bank said it had intervened in the foreign exchanges to stem the rise of the Swiss franc, which surged on safe-haven buying.

Investors also sought the relative safety of government bonds. The price on the German benchmark 10-year sovereign bond rose sharply, pushing its yield into negative territory for only the second time in its history.

UK government bonds also rose, taking their 10-year yield to a historic low.

Gold, a traditional refuge asset, struck a two-year high.

But elsewhere, billions of dollars were wiped off investment portfolios.

India's rupee, the Canadian dollar and the Singapore dollar all suffered heavy losses, while the South African rand lost six percent on the day as emerging markets were hurt by sudden aversion to risk.

The prospect of a severe hit to the global economy also hammered oil prices.