REFILE-UPDATE 2-British stocks drop as prospect of no-deal Brexit grows

(Updates quote in first bullet point)

* PM Johnson says chances of no-deal Brexit "very, very
likely"

* GSK muted on signalling vaccine delay

* Rolls-Royce tumbles on deepening 2020 cash outflow
forecast

* FTSE 100 down 0.8%, FTSE 250 off 0.7%

By Sagarika Jaisinghani and Shashank Nayar

Dec 11 (Reuters) - London-listed shares ended lower on
Friday as investors prepared for Britain to leave the European
Union in three weeks without a trade deal, while Rolls-Royce
tumbled after it downgraded this year's forecast.

The blue-chip FTSE 100 shed 0.8%, with energy
and banking stocks leading declines.
Oil majors BP and Royal Dutch shell were the
biggest drags on the index.

The domestically-focused FTSE 250 slipped 0.7%,
bringing weekly declines to nearly 3%, after British Prime
Minister Boris Johnson said that it was "very, very likely" that
trade talks with the European Union would fail and that the UK
would leave the bloc at the end of year without a
deal.

The FTSE 250 would slide between 6%-10% and UK bank shares
would drop 10%-20% with a no-trade deal Brexit, Morgan Stanley
strategists said.

"The increasing likelihood of a no-deal Brexit at the end of
the year has definitely dampened mood in the near term, but
investors continue to price for a last minute arrangement or
further talks even after the year-end deadline," said Andrea
Cicione, a strategist at TS Lombard.

German Foreign Minister Heiko Maas said that Britain and EU
may have to continue negotiations to complete a deal beyond a
deadline set for Sunday and that the talks will not fail as a
few more days of discussions are needed.

London's benchmark stock indexes have bounced since a
coronavirus-driven crash in March, but have lagged their U.S.
and European peers as data suggests a much deeper impact on
domestic economic growth.

A Reuters poll this month found it will take at least two
years for UK GDP to reach pre-pandemic levels.

In company news, drugmaker GlaxoSmithKline dropped
0.3% as it said the experimental vaccine it was developing with
France's Sanofi showed an insufficient immune response
in clinical trials.

Rolls-Royce tumbled 7.9% as it deepened this year's
cash outflow forecast and warned the outlook remained
challenging.
(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by
Arun Koyyur and Keith Weir)