London bombs rock markets

Reports of explosions at three London underground stations sent safe-haven government bonds surging and prompted equities to shed gains on Thursday amid fears of further attacks in the British capital.

The incidents come just two weeks after blasts linked to suspected Islamic militants killed at least 50 people in the city.

Bond futures rallied on reports that the tube was being evacuated after smoke was seen coming out of a train and following reports of a nail bomb exploding at the Warren Street station.

Sterling fell broadly, while gold and the safe-haven Swiss franc firmed.

European stocks, which earlier hit a three-year high, gave up their gains

The news overshadowed earlier news that China had scrapped its decade-old peg against the dollar in favour of a basket of currencies in a move seen as an important step in correcting global trade imbalances.