GLOBAL MARKETS-Investors turn wary as Brexit, Trump uncertainty grows

Investors sold sterling and stocks on Monday, looking for safe place in gold and the Japanese yen as vulnerability over Britain's takeoff from the European Union and the arrangements of U.S. President-elect Donald Trump controlled hunger for unsafe resources.

U.S. markets were shut for the Martin Luther King Day occasion,
pleating market action and conceivably fueling value moves.

The dollar .DXY ascended, with the exception of against the yen, bouncing back subsequent to affliction its most noticeably bad week since November a week ago, when it was hit by an absence of clarity over what Trump, whose introduction is on Friday, will do once he accept office.

The price of gold, a frequently sought haven for investors in uncertain times, hit its highest level since November.

"The market is taking a reality check from Trump euphoria, equity markets are moving sideways, the dollar has steadied and bond yields are down, allowing gold to recover," Julius Baer commodities analyst Carsten Menke said.

Yields on low-risk German government bonds fell, but those on Italian equivalents edged up after rating agency DBRS cut Italy's credit rating late on Friday, a move that could raise borrowing costs for the country's banks.

But the eye-catching mover was Britain's pound, a day before a speech by British Prime Minister Theresa May. Media reported that she would lay out an exit from the EU that would see Britain lose access to the bloc's single market.

The pound GBP=D4 fell as low as $1.1983 in thin early Asian trade, which, barring a sudden "flash crash" in October, was its weakest against the dollar in 32 years.

Investors will scrutinize May's speech for clues to whether she plans to prioritize immigration controls in a "hard Brexit" that some analysts say could hurt the economy.

The fall in sterling, which makes UK exports cheaper, has contributed to an unprecedented 14-day rally in the blue-chip FTSE 100 stock index .FTSE.

The index fell 0.2 percent on Monday but still outperformed continental European markets. The main STOXX 600 index fell 0.8 percent, as declines in autos and banks offset a rally in eyewear makers Luxottica (LUX.MI) and Essilor (ESSI.PA), who agreed a 46 billion-euro merger.

German carmakers BMW (BMWG.DE), Daimler DAIG.DE and VW (VOWG.DE) fell between 1.6 and 1.8 percent after Trump warned he would impose a 35 percent border tax on vehicles imported to the U.S. market.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.6 percent, Japan's Nikkei .N225 lost 1 percent as the strong yen hit exporters.

Sterling last traded at $1.2055, down 1 percent on the day. The euro was up 0.6 percent at 87.97 pence EURGBP= while the yen was up 0.8 percent at 137.40 to the pound.

"Every time there’s hard Brexit headlines, that triggers a fresh bout of selling," MUFG currency analyst Lee Hardman said.

"It's almost impossible to see Europe allowing the UK to remain a full member of the single market if it wants to regain control of the border and the laws and wants to strike its own agreement," he added.

The dollar index .DXY, which measures the U.S. currency against six of its peers, rose 0.4 percent. The euro EUR= fell 0.4 percent to $1.0602 while the yen, another perceived safe haven investment, rose 0.5 percent to 113.99 per dollar.