LONDON – European stocks closed higher Tuesday afternoon, trying to bounce back from a brutal sell-off in the previous session despite concerns over a new strain of coronavirus in the UK
The pan-European Stoxx 600 temporarily closed 1.3% higher, with the German DAX and French CAC indexes rising 1.3% and 1.6% respectively. The UK FTSE 100 closed after an initial decline of 0.5%. Bank stocks were among the top winners, up 1.8%, with Barclays and Lloyds both gaining over 3% to lead the sector. Elsewhere, technology increased 2.5% as European markets closed.
European markets came under heavy selling pressure on Monday as they had concerns about a rapidly spreading Covid mutation, first identified in the UK. The new variant forced the British government to shut down London and other parts of south-east England and to trace the confusion of households over the Christmas break.
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. It has resulted in several countries around the world closing their borders with the UK, disrupting travel and raising concerns about possible food shortages as the deadline for the Brexit transition approaches.
Meanwhile, the UK and EU remain bogged down on post-Brexit trade relations as the December 31 deadline draws nearer and disputes over issues such as fisheries plague talks. British Prime Minister Boris Johnson said Monday the country could still collapse without a deal.
“The position is unchanged, there are problems,” British Prime Minister Boris Johnson told reporters on Monday. “It is important for everyone to understand that Britain needs to be able to fully control its own laws and that we need to be able to control our own fisheries.”
“The case remains that the WTO terms are more than satisfactory for the UK and we can certainly face any difficulties that come our way.”
Sterling extended Monday’s losses on Tuesday and fell another 1% to around $ 1.33.
Official data showed that UK GDP grew a record 16% in the third quarter, but still didn’t make up for an 18.8% decline in the previous quarter when much of the economy closed.
On Wall Street, major U.S. stock indices around the flatline opened as a litany of Covid-related headlines kept an otherwise impressive rally under control in the fourth quarter.
The Dow Jones Industrial Average opened just under 40 points, or around 0.15%. Losses at Visa, Nike and 3M more than offset the gains at Boeing, Apple and Salesforce.
The muted move came when Congress passed a coronavirus aid and government spending package on Monday evening. The bill now goes to President Donald Trump’s desk.
On the individual stock market, UK supermarket stocks came under pressure Tuesday after warning that disruption from international travel bans could create gaps on store shelves. Sainsbury fell by 1.1% while Tesco and B&M European hovered around the flatline.
