Stocks, pound rally as tweaked Brexit deal soothes investor worries

SHANGHAI/LONDON (Reuters) – Last-minute tweaks to Britain’s deal to leave the European Union triggered gains across global stocks and propelled sterling higher on Tuesday, soothing investor worries about a possible no-deal exit that has unnerved financial markets in recent months.

People check their mobile phones as they stand outside the entrance of the London Stock Exchange in London, Britain. Aug 23, 2018. REUTERS/Peter Nicholls

Gains in Asian equities extended to Europe, where the pan-European STOXX 600 was up 0.2 percent, after Brussels agreed to additional changes to an updated Brexit deal with British Prime Minister Theresa May on Monday.

Wall Street futures were also higher in early European trade.

The Dublin stock exchange, a barometer for sentiment around the UK’s departure from the bloc, rose 0.9 percent, outperforming its European peers, while the UK’s blue chip FTSE 100 dropped 0.1 percent.

With 70 percent of its income coming from abroad, the blue chip index is often pressured by a stronger pound.

Sterling, which had already risen ahead of the talks on changes, rallied on hopes the assurance may be enough to sway rebellious British lawmakers who have threatened to vote down May’s plan again on Tuesday.

A reduced likelihood of crashing out of the EU with no Brexit deal helped inject some appetite for riskier assets, potentially eliminating one of the three major concerns of global investors, alongside trade and slowing global growth.

But it was not clear if the changes would be enough to secure parliamentary support when lawmakers vote around 1900 GMT, having voted down May’s original deal by a record 230 votes in January.

The pound was up 0.5 percent, buying $1.3218 and taking its gains over two days to 2.6 percent.

“This additional agreement to the existing contract does slightly increase the probability that by tonight the

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