Jul 5, 2016 2:07 PM

Conservative Party starts choosing leader as pound sinks

The Associated Press

LONDON (AP) — The race to succeed Conservative Prime Minister David Cameron intensified Tuesday as Britain grappled with growing signs of economic strain resulting from the country's vote to leave the European Union.

With the British currency plunging to its lowest point in three decades, Home Secretary Theresa May scored a substantial victory in the first round of voting to determine who will follow Cameron as party leader and prime minister.

She garnered just over half the votes cast, with 165 Conservative Party members of Parliament backing her. The voting continues Thursday with lawmakers choosing from the four remaining candidates — former defense secretary Liam Fox was eliminated after finishing last in the first round.

May had supported staying within the EU bloc during the campaign, but now says the voters' desire to leave as expressed in the June 23 referendum must be respected.

She faces competition from Energy Minister Andrea Leadsom, who finished second, Justice Secretary Michael Gove and Stephen Crabb.

Once the party's lawmakers have narrowed the field to just two candidates, the matter will be put in the hands of the entire Conservative Party membership, which will determine who takes over from Cameron and negotiates Britain's planned departure from the EU bloc.

May said she was pleased by the result and very grateful to her colleagues.

"There is a big job before us: To unite our party and the country, to negotiate the best possible deal as we leave the EU, and to make Britain work for everyone," she said.

The ramifications of leaving the EU's single market of 500 million are roiling financial markets. The British pound was down sharply Tuesday, as were shares in U.K. real estate companies, amid concerns that the exit from the EU will hurt property prices in Britain.

The pound was down 0.9 percent to $1.3166, its lowest since the vote and the weakest in 31 years.

Amid the upheaval, Bank of England Gov. Mark Carney projected a sense of calm Tuesday as he relaxed capital requirements for banks to free up money for loans for homes and businesses.

"The bank can be expected to take whatever action is needed to promote monetary and financial stability, and as a consequence, support the real economy," Carney said. "These efforts mean we can all look ahead, not over our shoulders."

The Bank of England has cited commercial real estate as one of the risks to the British economy. The sector had taken in capital from overseas and had become "stretched," the bank said.

Financial groups Aviva Investors, Standard Life and M&G Investments stopped trading Tuesday in commercial property funds following a rapid increase in investors trying to liquidate their holdings. Both said they stopped trading to protect other investors who wished to remain in their respective funds.

"The dominos are starting to fall in the U.K. commercial property market, as yet another fund locks its doors on the back of outflows precipitated by the Brexit vote," Laith Khalaf, a senior analyst at Hargreaves Lansdown, said after the move by Aviva. "It's probably only a matter of time before we see other funds follow suit."

There were major drops in property companies' shares. Barratt Developments was down 6.2 percent, Taylor Wimpey 6.5 percent and Persimmon 5.4 percent.

Top EU officials, besides wondering with whom they will eventually negotiate, had sharp comments Tuesday about the U.K. leaders who pushed so hard to get Britain out of the EU — and then stepped aside.

That includes former London Mayor Boris Johnson, who declined a Conservative leadership battle after losing Gove's support, and Nigel Farage, who has stepped down as leader of the U.K. Independence Party after helping lead Britain to Brexit, as the exit plan is known.

European Commission President Jean-Claude Juncker told EU lawmakers that "leave" figureheads Johnson and Farage "are not patriots."

"Patriots don't resign when things get difficult," he said. "They stay."

Guy Verhofstadt, the Liberal bloc leader in the EU Parliament, likened the U.K. resignations to "rats fleeing a sinking ship."

___

Lorne Cook in Brussels contributed to this report.

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