Source: Sharecast
At 0830 GMT, the FTSE 100 was down 1.7% at 6,421.55, while sterling was 1.7% weaker versus the dollar at 1.3290 and 0.9% lower against the euro at 1.0908 as Brexit talks missed Sunday’s deadline and were set to continue after EU negotiator Michel Barnier said they had reached a "crucial" stage.
Covid concerns added to the downside after London and the South East were plunged into tougher Tier 4 restrictions over the weekend due to a new strain of the virus. This was compounded by a travel ban as a number of countries such as France, Italy, the Netherlands, Belgium and Germany halted flights from the UK, all due to the new Covid variant.
In addition, France closed its border to all traffic including freight overnight, causing the Port of Dover and the Eurotunnel to close.
UK Transport Secretary Grant Shapps insisted earlier that the UK will not ask for an extension to the Brexit transition period, despite chaos at UK ports.
There was some good news across the pond, however, as legislators finally agreed on a $900bn Covid stimulus package.
Richard Hunter, head of markets at Interactive Investor, said the UK’s: "The new coronavirus strain is weighing heavily on sentiment as the UK’s isolation from Europe becomes increasingly physical as well as conceptual.
"With some cases also being reported outside of the UK and with several countries suffering fresh spikes in cases and resorting to further lockdowns, the stark reminder is that until the vaccine rollout reaches a sufficient level, little can be done to defeat the virus.
"Against this backdrop, investors are far less likely to commit fresh capital to the market, especially in the last few trading days of the year.
"For the UK, the introduction of a new Tier 4 pandemic level accompanies an ongoing stalemate in Brexit negotiations, with talks set to extend yet again.
"This double whammy has led to a weak open, with the FTSE 100 taking a further hit and now down by 15% in the year to date."
Unsurprisingly, airline shares and leisure stocks suffered the brunt of the selloff, with British Airways owner IAG, budget airline easyJet and Wizz Air all sharply lower. Engine maker Rolls-Royce was also under the cosh.
Cineworld, Carnival, Tui and pub chain Wetherspoons were also under pressure.
Elsewhere, Royal Dutch Shell lost ground after saying it was writing down $3.5bn to $4.5bn in the value of its oil and gas assets next year as it assessed the current impact of the coronavirus pandemic on fourth quarter operations.
Mike Ashley’s Frasers Group fell sharply after saying it was pulling full-year guidance after the UK government closed non-essential retail stores in response to a new variant of the coronavirus breaking out in London and the South East. The company, which includes the Sports Direct chain, had guided for a 20% - 30% improvement in underlying core earnings during full-year 2021.
On the upside, precious metals miners Polymetal, Fresnillo and Centamin all shone as gold prices rallied.
Metro Bank shares surged after it agreed to sell a mortgage portfolio to NatWest in a £3.1bn deal. Shares of NatWest slumped.
Online supermarket Ocado and Just Eat Takeaway - both of which have benefitted from Covid restrictions and lockdowns - were higher.
Market Movers
FTSE 100 (UKX) 6,421.55 -1.65%
FTSE 250 (MCX) 19,621.61 -2.46%
techMARK (TASX) 4,007.29 -1.61%
FTSE 100 - Risers
Polymetal International (POLY) 1,735.50p 2.33%
Fresnillo (FRES) 1,165.50p 2.28%
Ocado Group (OCDO) 2,258.00p 2.22%
Reckitt Benckiser Group (RB.) 6,574.00p 1.86%
Scottish Mortgage Inv Trust (SMT) 1,205.00p 1.69%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,102.00p 1.66%
Rio Tinto (RIO) 5,706.00p 0.92%
GlaxoSmithKline (GSK) 1,367.80p 0.84%
Croda International (CRDA) 6,380.00p 0.73%
Admiral Group (ADM) 2,963.00p 0.68%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 130.00p -16.85%
Rolls-Royce Holdings (RR.) 100.65p -11.67%
Lloyds Banking Group (LLOY) 32.50p -6.88%
Associated British Foods (ABF) 2,110.00p -6.18%
NATWEST GROUP PLC ORD 100P (NWG) 148.00p -5.94%
British Land Company (BLND) 450.50p -5.85%
Whitbread (WTB) 2,897.00p -5.79%
Barratt Developments (BDEV) 613.00p -5.69%
Melrose Industries (MRO) 159.70p -5.64%
Legal & General Group (LGEN) 241.60p -5.62%
FTSE 250 - Risers
Centamin (DI) (CEY) 123.20p 2.75%
Vivo Energy (VVO) 84.30p 2.06%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,102.00p 1.66%
Monks Inv Trust (MNKS) 1,352.00p 1.65%
Signature Aviation (SIG) 374.10p 1.41%
Caledonia Investments (CLDN) 2,905.00p 1.40%
Worldwide Healthcare Trust (WWH) 3,780.00p 1.34%
JPMorgan American Inv Trust (JAM) 577.00p 1.23%
Hochschild Mining (HOC) 207.20p 1.17%
Scottish American Inv Company (SAIN) 463.00p 1.09%
FTSE 250 - Fallers
Cineworld Group (CINE) 48.38p -22.79%
easyJet (EZJ) 691.00p -15.32%
Hammerson (HMSO) 22.04p -14.71%
Carnival (CCL) 1,187.00p -13.45%
TUI AG Reg Shs (DI) (TUI) 372.60p -10.67%
Capita (CPI) 34.76p -10.60%
National Express Group (NEX) 215.40p -9.11%
Micro Focus International (MCRO) 400.00p -8.80%
Aston Martin Lagonda Global Holdings (AML) 1,518.60p -8.19%
Wetherspoon (J.D.) (JDW) 985.50p -7.81%