LONDON – European stocks closed higher on Tuesday afternoon, attempting to recover from a sharp sell off in the previous session, despite concerns over a new strain of coronavirus in the UK
The pan-European Stoxx 600 provisionally closed 1.3% higher, with the German DAX and French CAC indices rising by around 1.3% and 1.6% respectively. The UK FTSE 100 closed 0.5% higher after an initial drop. Bank stocks were among the top gainers, up 1.8%, with Barclays and Lloyds both rising more than 3% to lead the sector. Elsewhere, technology rose 2.5% as European markets closed.
European markets came under strong selling pressure on Monday over concerns over a rapidly spreading Covid mutation that was first identified in Britain. The new variant has forced the UK government to shut down London and other parts of south-east England and reverse household mix over the Christmas holidays.
The variant, which scientists say is up to 70% more transmissible than previous strains in the UK, has also been identified in Italy, the Netherlands, Belgium, Denmark and Australia. This has prompted many countries across the world to close their borders with Britain, disrupting travel and raising concerns about potential food shortages as the Brexit transition deadline approaches.
Meanwhile, UK and EU remain deadlocked over post-Brexit trade relations as the December 31 deadline approaches, with disputes over issues such as fisheries plaguing negotiations . British Prime Minister Boris Johnson said on Monday that the country could still collapse without a deal.
“The position remains unchanged, there are problems,” British Prime Minister Boris Johnson told reporters on Monday. “It is vital that everyone understands that the UK must be able to fully control its own laws and also that we must be able to control our own fisheries.”
“The fact remains that the conditions in the WTO would be more than satisfactory for the UK and we can certainly cope with any difficulties that come our way.”
The British pound extended Monday’s losses on Tuesday, falling 1% to around $ 1.33.
Official data showed the UK’s GDP grew a record 16% in the third quarter, but that still did not offset the 18.8% drop in the previous quarter, when much economy had been closed.
On Wall Street, major US stock indices opened around the flat line as a litany of Covid-related headlines kept a lid on an otherwise impressive rally in the fourth quarter.
The Dow Jones Industrial Average opened a little lower, down 40 points, or about 0.15%. The losses of Visa, Nike and 3M more than offset the gains of Boeing, Apple and Salesforce.
The muted move came as Congress passed a coronavirus relief and government spending program on Monday evening. The bill now goes to President Donald Trump’s office.
As for individual stocks, stocks in UK supermarkets were under pressure on Tuesday after warning that the disruption of international travel bans could lead to gaps on shelves. Sainsbury fell by 1.1% while Tesco and B&M European revolved around the flat line.