British mid-caps muted as London goes into tougher lockdown

By Shivani Kumaresan

(Reuters) -British mid-cap stocks were subdued on Tuesday as tougher restrictions were imposed in London to curb a resurgent COVID-19 pandemic, while investors awaited a Brexit trade deal with the European Union before a year-end deadline.

The domestically focussed FTSE 250 index was nearly flat a day after it posted its best session in more than a week on optimism that Britain and the EU would continue Brexit talks.

The blue-chip FTSE 100 index gained 0.4%, with declines in healthcare stocks more than offset by gains for the energy and mining sectors.

London will move into England’s highest tier of COVID-19 restrictions on Wednesday, with additional curbs on restaurants and socialising, due to increased infection rates that may be partly linked to a new variant of the coronavirus.

“The next couple of months are going to be challenging in a way … because regardless of the restrictions, it’s clear that families are going to congregate,” said Craig Erlam, a senior market analyst at OANDA Europe.

“The vaccine is here but it takes time to actually vaccinate the most vulnerable people and, therefore, will have an impact in terms of number of fatalities.”

The FTSE 100 has lost 13% in value so far this year, which is shaping up to be its worst since the global financial crisis in 2008-09, as pandemic-driven lockdowns battered the economy and led to mass layoffs.

Data on Tuesday showed Britain’s jobless rate rose again in the three months to October and redundancies reached a record high.

Among individual moves, online trading platform IG Group Holdings (LON:IGG) Plc gained 2.5% after forecasting a surge in first-half revenue as coronavirus-led volatility in financial markets stoked strong client activity.

JD Sports, Britain’s biggest sportswear retailer, jumped 5.7% after buying retailer Shoe Palace for $325 million in a move that would expand its footprint in the U.S. West Coast.