Environment Secretary and Brexiteer Michael Gove is willing to replace Raab as Brexit secretary only if he can renegotiate the deal and a Nov. 25 EU summit to endorse it is scrapped, the Daily Telegraph's deputy political editor tweeted, adding that Gove is still weighing up whether to quit the cabinet.

- The Financial Conduct Authority said it was in regular contact with financial firms as shares in major banks tumbled on worries over future access to the EU market.

- Shares in Royal Bank of Scotland were down 8.99 percent, their biggest one-day fall since the June 2016 referendum. Barclays and Lloyds Banking Group dropped 4.5 and 5.7 percent respectively.

- Sterling tumbled 1.5 percent versus the dollar and was headed for its biggest drop this year against the euro.

- France led calls among EU states for changes to the draft deal.

- A leadership challenge to May could be completed in weeks, eurosceptic lawmaker Jacob Rees-Mogg said.

- The BBC reported Conservative lawmakers have not yet submitted enough letters to trigger a confidence vote in her.

- A vote can be triggered if 48 Conservative lawmakers (15 percent of the total) write a letter of no confidence to the chairman of the party’s so-called 1922 committee, Graham Brady.

- May's spokesman said she will fight for her premiership if such a vote is called.

STOCK MARKET Brexit-sensitive British stocks slid. Housebuilders, retailers and banks all fell, dragging the FTSE 250 index down 1.5 percent, while the exporter-heavy FTSE 100 managed to hold flat, supported by a plunge in the value of sterling.

CURRENCY MARKET Sterling fell to a session low versus the euro on the report that Rees-Mogg will submit a letter of no confidence in May. The pound sank to 88.52 pence to the euro, down 1.5 percent, and is set for its second biggest drop this year.

"We are experiencing huge sell orders and the sterling-dollar pair is in free fall for now", Think Market analyst Naeem Aslam said.

Debt market

Nerves among British government bond investors forced the debt agency to accept low bids for a 20-year bond at auction to an extent not seen since March 2009. Data from Refinitiv showed the spread between 10-year and 30-year gilt yields had ballooned by more than 11 basis points.

Financial industry

British financial regulators held a conference call with major banks seeking feedback on market conditions after the pound and financial stocks sank following Raab's resignation, sources said. One source said the call was a direct request from Bank of England Governor Mark Carney. The central bank declined to comment.

Britain's financial services industry greeted the draft agreement with weariness and worry, spooked by a political revolt that could topple the government and bring fresh troubles to a sector already reeling from upheaval. Euro zone banks which issued large amounts of loss-absorbing debt under English law could have more time to meet requirements after Brexit, the bloc's agency responsible for winding down failing lenders.

Thursday's resignations

Dominic Raab: Brexit minister

Esther McVey: Work and Pensions Secretary

Shailesh Vara: junior Northern Ireland minister

Suella Braverman: junior Brexit minister

A parliamentary aide to education ministers and a Conservative Party vice chairman also quit.

Prime Minister May's comments

"We have been preparing for no-deal and we continue to prepare for no-deal because I recognise that we have a further stage of negotiation with the European Council and then that deal when finalised ... has to come back to this House," she told the House of Commons.

"The choice is clear: We can choose to leave with no deal, we can risk no Brexit at all, or we can choose to unite and support the best deal that can be negotiated."

EU opinion

German Chancellor Angela Merkel responded: "We have a document on the table that Britain and the EU 27 have agreed to, so for me there is no question at the moment whether we negotiate further... You have to see the alternatives and then ask: is what we have a basis?"

French Prime Minister Edouard Philippe added: "We need to prepare ourselves for the possibility of a 'no-deal' Brexit," Philippe said.

"It will escape no one that the current political situation in Britain could fuel uncertainty... over the ratification of the accord."

Airbus welcomed the draft agreement but Chief Executive Tom Enders said: "We look forward to further clarity and the removal of uncertainty as soon as possible so that Airbus, like every business in the UK, can properly plan for the future."