(Sharecast News) - London stocks fell in early trade on Friday after Prime Minister Boris Johnson warned there was a "strong possibility" of a no-deal Brexit.
At 0840 GMT, the FTSE 100 was down 0.9% at 6,543.72, while the pound was 0.5% lower against the dollar at 1.3229 and 0.2% weaker versus the euro at 1.0936.
The FTSE 250 was off 1.1% at 19,543.59.
Richard Hunter, head of markets at Interactive Investor, said: "The increasing possibility of a no-deal outcome will add further fuel to bears of a UK economy already weighed down by a difficult road to economic recovery.
"Ironically, this has had a marginally positive effect on the FTSE100 given the exposure of the index to overseas earnings, with the drop of 13% in 2020 representing some improvement from the lower levels of earlier in the year."
In equity markets, banks and housebuilders slumped amid Brexit worries, with Barclays, Lloyds, NatWest, Persimmon, Taylor Wimpey and Barratt Developments all weaker.
Aircraft engine maker Rolls-Royce also fell despite saying it expected to turn cash flow positive in the second half of 2021 as air travel demand started to recover from the Covid-19 crisis driven by vaccination programmes. The company maintained full-year guidance, adding it was targeting target at least £750m in free cash flow, excluding disposals, as early as 2022 and at least £2bn from disposal proceeds.
Bellway was in the red even after saying it expected annual volumes to rise by a quarter as the stamp duty holiday and government help drove higher demand for new homes. The company said its forward order book was up 18.7% to £1.77bn in the 17 weeks to November 2
On the upside, Calisen shares surged after it agreed to be bought by a consortium of investors in a deal that values the smart meter company at £1.4bn.
Elsewhere, Just Eat Takeaway and online supermarket Ocado - both of which have benefited from Covid-19 restrictions and lockdowns - were on the rise.