* Dollar gains, boosted by recent economic data
* Oil prices slightly add to recent gains
(Updates prices, adds comment, changes dateline from previous
By Rodrigo Campos
NEW YORK, Oct 4 Sterling slumped to a 31-year
low versus the U.S. dollar on Tuesday as concerns over Britain's
separation from the European Union were compounded by the
renewed strength of the greenback on a recent string of
better-than-expected economic data.
Despite the dollar strength, both Brent and U.S. crude added
slightly to recent gains that have come on bets that OPEC and
non-OPEC oil producers could reach an agreement on limiting
Sterling hit its weakest since 1985, pressured by a growing
sense that Britain may be heading for a "hard" exit from the EU
where it severs links to the single market in favor of total
control over immigration.
The pound was down 0.8 percent at $1.2739, and near a
three-year low at 87.78 pence per euro.
"It is now abundantly clear that access to the single market
is not on (Prime Minister) Theresa May's list of top priorities
and the market is realizing that ... there is more pressure for
the pound in the weeks and months ahead," said UniCredit global
head of FX strategy Vasileios Gkionakis.
London's FTSE cheered the idea of a weaker pound
boosting firms' exports, rising 1.3 percent to the highest in
more than a year and not far from a record peak.
On Wall Street traders withdrew from interest rate-sensitive
sectors, with utilities, telecoms and real estate posting the
largest percentage drops among S&P 500 sectors.
The Dow Jones industrial average fell 43.29 points,
or 0.24 percent, to 18,210.56, the S&P 500 lost 5.5
points, or 0.25 percent, to 2,155.7 and the Nasdaq Composite
dropped 1.92 points, or 0.04 percent, to 5,298.95.
The pan-European FTSEurofirst 300 index rallied 1.1
percent, while MSCI's gauge of stocks across the globe
ticked down 0.1 percent.
Recent U.S. data indicating a strengthening manufacturing
sector along with an upward revision to second-quarter gross
domestic product has boosted bets of a Fed rate hike by year
end. Traders now see above even odds of a rate increase in
Asian shares finished modestly higher overnight, led by a
0.8 percent rise from Japan's Nikkei as the stronger
dollar muscled the yen lower.
Oil prices edged up, with Brent hitting four-month highs on
a rally inspired by OPEC plans to tighten output before pulling
back as the stronger dollar weighed.
U.S. crude was up 0.2 percent at $48.90 a barrel and
Brent last traded at $51.12, up 0.5 percent on the day.
The dollar index, which tracks the currency against a basket
of major peers, rose 0.5 percent to 96.191. The greenback
strengthened to 102.780 yen and $1.1184 per euro.
U.S. Treasury yields rose. Benchmark 10-year notes
fell 12/32 in price to yield 1.6655 percent, up from
1.624 percent on Monday.
Spot gold prices fell $36.14 or 2.8 percent, to
$1,275.31 an ounce.
(Additional reporting by Barani Krishnan and Richard Leong;
Editing by Meredith Mazzilli)