FILE PHOTO: British Pound Sterling banknotes are seen at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger/File Photo

LONDON (Reuters) - The British pound fell almost 1.5 percent on Friday, hurt by Prime Minister Theresa May warning European Union leaders to come up with new alternatives to her Brexit proposals if they are to break a deadlock in the talks.

Sterling dropped to as low as $1.3076 GBP=D3, almost two cents lower than where it started the day. Against the euro the pound tumbled 1.1 percent to 89.78 pence EURGBP=D3.

The internationally-exposed FTSE 100 .FTSE rallied and British 10-year government bond yield extended its fall GB10YT=RR.