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(Alliance News) - A downbeat start to the week turned to carnage on Tuesday, with the FTSE 100 shedding 140 points on worries over the international virus situation.

Travel stocks tumbled as India grappled with a surge in cases and the Japanese city of Osaka asked the central government to impose a state of emergency.

The FTSE 100 index closed down 140.21 points, or 2.0%, at 6,859.87. The FTSE 250 ended down 382.31 points, or 1.7%, at 22,108.55, and the AIM All-Share closed down 13.98 points, or 1.1%, at 1,237.87.

The Cboe UK 100 ended down 2.1% at 682.65, the Cboe UK 250 closed down 1.8% at 19,797.37, and the Cboe Small Companies ended down 1.1% at 14,334.74.

In European equities on Tuesday, the CAC 40 in Paris ended down 2.1%, while the DAX 30 in Frankfurt slid 1.6%.

"European markets have been hit hard today, with rising global coronavirus cases serving as a timely reminder that the pandemic is far from over despite recent vaccination progress," said Joshua Mahony, senior market analyst at IG.

While there was optimism on the vaccine front in Europe as an EU official promised to have enough doses available to vaccinate 70% of European adults by the summer - a boon for the continent's sluggish rollout - India is battling a worrying surge in cases.

The capital New Delhi was locked down Monday for a week, and the government said all adults would be eligible for a vaccine from May as it tries to get a grip on the crisis. The US Centers for Disease Control on Monday advised against all travel to India, and the UK imposed restrictions on arrivals from the country.

Concerns about a spike were also growing in Japan, where the third most populated region, Osaka, on Tuesday asked the central government to impose a state of emergency as infections rise just three months before the country hosts the Olympics.

Meanwhile, the European Medicines Agency said in it had found a "possible link" between the Johnson & Johnson coronavirus vaccine and blood clots, following eight such cases in the US, one of which was fatal.

Concerns over the vaccine by US pharmaceutical giant Johnson & Johnson and the jab by rival drugmaker AstraZeneca have dampened hopes that vaccines could offer a swift end to the pandemic.

Nonetheless, the benefits still outweigh the risks, the EU watchdog said. The US is also expected to announce its decision on the single-shot J&J vaccine by Friday.

IG's Mahony said: "Traders appear to be caught between the optimism of a gradual reopening at home and pessimism over the growth in more worrying strains around the world...With just 6% of the world having received a vaccine dose, the risk of further mutations remains too high to ignore. "

As a result, travel stocks were amongst the worst hit in London on Tuesday, with British Airways owner International Consolidated Airlines sinking 8.1%, cruise operator Carnival tanking 6.4% and easyJet tumbling 5.4%.

The second worst performer in the FTSE 100 on Tuesday was British American Tobacco, slumping 7.6% after the Wall Street Journal reported US President Joe Biden's administration is mulling cutting the amount of nicotine allowed in cigarettes.

Citing people familiar with the matter, the WSJ reported that the cut would leave the amount of nicotine in cigarettes at levels which are no longer addictive.

The measure could be paired with a move to ban menthol cigarettes, the WSJ added, noting that health watchdog US Food & Drug Administration has until April 29 to decide on whether or not to ban menthols.

Imperial Brands, a fellow blue-chip tobacco firm, closed down 7.3%.

Primark clothing chain owner Associated British Foods shed 5.9% despite declaring a dividend, as it looked to a "softer" second half performance from its Grocery, Sugar, Agriculture and Ingredients businesses.

AB Foods reported an 8% decline in pretax profit for the first half of its financial year to GBP275 million, while revenue fell by 17% to GBP6.31 billion year-on-year. On a constant currency basis, revenue was 18% lower that the previous year.

Positively though, the FTSE 100-listed food processing and retailing company declared a 6.2 pence per share payout for the 24 weeks to February 27, after not paying any dividends for its previous financial year due to the coronavirus pandemic. Its decision on its final dividend will be determined by trading during the second half of the year, it added.

Looking forward, AB Foods said, following the "exceptional" performance of its Grocery, Sugar, Agriculture and Ingredients businesses in the first half, it expects a "softer" performance in the second half. It continues to expect Primark profit to be somewhat lower than last year.

In the FTSE 250, Elementis shares closed 1.0% lower - despite trading more than 20% higher during Tuesday's session - after rebuffing a takeover approach from US firm Innospec.

Innospec confirmed it made an approach for UK speciality chemical peer Elementis, though said Elementis turned the deal down, which was made at the end of March.

Sky News had reported late Monday that Innospec had made a written offer to Elementis worth 200p per share in cash and shares.

Stocks in New York were in the red at the London equities close, with the Dow Jones down 0.9%, the S&P 500 index down 1.0%, and the Nasdaq Composite down 1.4%.

The dollar was mixed on Tuesday, with the safe haven Japanese yen nudging up amid the risk-off mood.

Against the yen, the dollar softened to JPY108.03 at the London close compared to JPY108.06 late Monday.

The pound was quoted at USD1.3940 at the London equities close Tuesday, down compared to USD1.3984 on Monday. The euro stood at USD1.2035 at the European equities close, firming on USD1.2029 at the same time on Monday.

Brent oil was quoted at USD65.71 a barrel at the London equities close Tuesday, falling from USD66.79 late Monday. Gold was quoted at USD1,776.45 an ounce at the London equities close Tuesday, up against USD1,773.63 at the close on Monday.

The UK corporate calendar for Wednesday has first quarter results from distribution firm Bunzl, production results from miners Antofagasta and Polymetal International and a trading statement from Wagamama dining chain owner Restaurant Group.

The economic calendar on Wednesday has UK inflation out at 0700 BST while there's a Bank of Canada interest rate decision at 1500 BST.

By Lucy Heming; lucyheming@alliancenews.com

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