* FTSE 100 down 0.6 pct
* Investors eye tighter than expected UK election
* Energy stocks weigh after oil price sell-off
* RBS leads financials higher
* RPC falls after results
(Adds details, closing prices)
By Helen Reid and Danilo Masoni
LONDON, June 7 Britain's major share index fell
on Wednesday, a day before Britons were set to begin voting in
parliamentary elections that will shape talks for the country's
exit from the European Union.
A sharp drop in energy shares and weakness among big
international companies, whose profits benefit from a weak local
currency, drove the FTSE 100 down 0.6 percent, as
sterling hit a two week high.
Polls have suggested that support for Prime Minister Theresa
May's party was slipping, raising the possibility of a smaller
majority or a hung parliament.
But investors still saw a Conservative majority as the most
likely outcome and although volatility has ticked up
over the past week, it remains near historic lows and far from
its levels in the run-up to the Brexit vote in June last year.
Mid-caps outperformed blue-chip stocks, up 0.2
percent after three sessions in the red. The more
domestically-exposed stocks have been under more pressure of
late due to the perception of heightened British political risk.
"I think mid-caps will do better on the back of a
Conservative win," said Colin McLean, manager of the UK growth
fund at SVM Asset Management, adding they may suffer from a win
by Labour whose policies could increase labour costs.
"The bigger picture is that international stocks have been
doing less well ... quite a lot of what drove markets last year
has gone into reverse over the last six months and investors are
looking again at some of the beneficiaries of lower growth and
deflation," he added.
"That probably drives investors a little bit more than the
The energy sector took most points off the FTSE as oil
prices fell sharply following data showing that U.S. stocks of
crude oil and gasoline surprisingly rose last week.
Shares in WPP were a top FTSE faller, down 2.6
percent, after the world's largest advertising group released a
poor trading update.
Financials stocks were the biggest boost to the index,
helped higher by relief after the rescue of Spain's Banco
Popular by Banco Santander.
Royal Bank of Scotland and Lloyds both rose
more than 1 percent.
Astrazeneca fell 1 percent, after selling the rights
for its migraine drug Zomig to Grunenthal for up to $302
Shire also dropped 3 percent.
House prices in May came in 3.3 percent higher than a year
ago, slightly ahead of the forecast by economists in a Reuters
poll, giving a boost to housebuilders Persimmon and
Money managers were treading carefully ahead of the next big
potential macro shock, mindful of the unexpected outcomes of the
Brexit vote and U.S. election.
"This is a dangerous game to play - as polls and bookmakers
alike can often be wrong. Even with the result known, market
direction is difficult to predict," said Asbjorn Trolle Hansen,
manager of the Nordea GBP diversified return fund.
Packaging group RPC's profits more than doubled, yet
it fell 7.2 percent, as some brokers raised concerns over its
"The group has tried to address these concerns with
increased disclosure in these results but has clearly failed to
satisfy the market," said Nicholas Hyett, equity analyst at
(Editing by Alexander Smith; Editing by Tom Heneghan)