(Alliance News) - A stronger pound was holding back the FTSE 100 on Tuesday as counterparts in Europe rebounded from sharp losses at the start of the week that had been driven by worries over a new coronavirus strain.
The FTSE 100 index was down 9.43 points, or 0.2%, at 6,406.89 early Tuesday. The mid-cap FTSE 250 index was up 117.63 points, or 0.6%, at 19,809.74. The AIM All-Share index was up 0.2% at 1,091.87.
The Cboe UK 100 index was down 0.2% at 607.84. The Cboe 250 was up 0.5% at 22,686.50, and the Cboe Small Companies up 0.1% at 14,888.13.
In mainland Europe, the CAC 40 in Paris was up 0.9% while the DAX 30 in Frankfurt was bouncing up 1.0% early Tuesday.
Asia had seen a negative session on Tuesday.
The Japanese Nikkei 225 index closed down 1.0%. Against the yen, the dollar was quoted at JPY103.40 versus JPY103.50.
In China, the Shanghai Composite ended down 1.9%, while the Hang Seng index in Hong Kong closed down 0.7%. The S&P/ASX 200 in Sydney closed down 1.1%.
Naeem Aslam, chief market analyst at AvaTrade, said news of a new coronavirus variant has "overshadowed everything".
Talks with France on reopening full trade and transport across the Channel are ongoing as the UK government's chief scientific adviser said more restrictions may be needed at home because cases of a mutant strain of Covid were now appearing "everywhere".
Patrick Vallance gave the grim warning after more than 40 countries banned UK flights because of fears regarding the spread of the coronavirus variant. Vallance indicated a lockdown may be needed in wider areas of England, particularly as Christmas mixing may result in an increased spread of cases.
After the government moved to impose Tier 4 restrictions on London and parts of southern and eastern England over the weekend, France shut its border with the UK for 48 hours, prompting delays for freight lorries heading across the Channel.
"There is no doubt that the US stock market moved away from its lows of the day yesterday, but the fact that stock futures are trading lower once again today is a matter of concern. If the selling pressure continues, it is highly likely that we will not only revisit the lows of yesterday, but the price could easily break below yesterday's low," said Aslam.
Also hampering the FTSE 100 on Tuesday was a stronger pound.
Sterling was quoted at USD1.3422 early Tuesday, up a US cent from USD1.3321 at the London equities close on Monday, though still well down from last week's highs above USD1.36. The euro traded at USD1.2226 early Tuesday, firming on USD1.2217 late Monday.
"GBPUSD is staging a recovery. Media reports the UK is willing to lower the EU haircut for fish caught in the UK waters down to about 33% from 60% previously, while the EU had last said 25% was their best and final offer. So, while they have not yet reached an agreement on this aspect, the gap has now narrowed," said Stephen Innes at Axi.
Further helping the pound was data showing the UK economy is estimated to have grown a record 16% in the third quarter of 2020 from the second quarter.
The third-quarter reading has been revised from sequential growth of 15.5% reported initially. While a record figure, UK gross domestic product is still 8.6% below where it was at the end of 2019, revised from an initial estimate of 9.7% - and follows a 19% slump in the second quarter of the year and 3.0% fall in the first quarter.
Domestically exposed stocks in London were higher in morning trade amid Brexit deal hopes, with lenders such as Lloyds Banking and Natwest rising 3.4% and 1.9% respectively. Housebuilder Barratt Developments rose 1.5%, and peer Berkeley advanced 1.2%.
At the bottom of the FTSE 100 in opening dealings were gold miners. Fresnillo fell 2.2% and Polymetal International down 1.6%, tracking the price of gold lower.
Gold was quoted at USD1,871.20 an ounce early Tuesday, easing from USD1,875.05 on Monday.
Oil prices also eased on Monday. Brent oil was trading at USD49.96 a barrel, lower than USD50.32 late Monday.
Applegreen shares rose 3.0% to 519.95 pence after agreeing to be taken over by BidCo, a newly-formed company owned by B&J Holdings and Blackstone Infrastructure Partners, in a EUR718.1 million deal.
Applegreen operates a number of petrol stations in Ireland, the UK and the US. B&J Holdings is a 41% shareholder in Applegreen and represents the holdings of Applegreen's founders, Robert Etchingham and Joseph Barrett.
Applegreen shareholders will receive EUR5.75 in cash under the deal - the same price touted earlier in December - being a 48% premium to the stock's closing price of EUR3.88 on December 9, the last business day before the publication of the possible offer announcement.
"The business has significant scope to further expand its footprint, which we believe will be best achieved in the private arena where the Group can benefit from the experience and capital of Blackstone as its partner, whilst maintaining the management and wider team which have driven the business forward to date," said Applegreen Chair Daniel Kitchen.
He continued: "The independent board is unanimously recommending the offer from BidCo, as it represents a compelling opportunity for independent shareholders to realise their investment in cash in the near term, and is at a significant premium to the prevailing share price."
The economic events calendar on Tuesday has US GDP figures at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
