By Bansari Mayur Kamdar
(Reuters) - UK's FTSE 100 declined on Tuesday as fears around a resurgence in COVID-19 cases hammered European markets, while online electricals retailer AO World plummeted after warning of product shortages.
The blue-chip FTSE 100 fell 0.7%, although the decline was less sharp compared to continental Europe, where German and French stocks were down more than 1% on concerns about fresh restrictions.
"Markets have turned volatile following the Covid developments around the European region, as well as muted rate of recovery for domestic businesses as operative hurdles continue to disrupt critical functions," said Kunal Sawhney, chief executive officer at Kalkine Group.
British minister Robert Courts said on Monday the UK was looking to review its COVID-19 travel rules in January.
Britain has lagged European peers in lifting travel restrictions with airlines complaining that the need for day-2 coronavirus tests and complicated passenger locator forms have deterred UK travel.
Limiting the FTSE 100's fall, miners including Rio Tinto (LON:RIO), BHP Group and Anglo American (LON:AAL) rose as metal prices gained ground.
The FTSE 100 has advanced 11.6% so far this year, helped by robust corporate earnings and record low interest rates. However, it continues to underperform its European peers as supply chain constraints and inflationary worries weigh on businesses.
The domestically focussed mid-cap index declined 1%, with AO World plunging 24.5% after it cut its fiscal 2022 profit outlook due to supply chain issues and warned of product shortages ahead of the key holiday shopping season.
Compass Group (LON:CPG) fell 1.2% after missing revenue estimates for 2021 and reporting some uncertainty related to labour shortages, inflation and the pandemic.
In M&A news, fund manager River and Mercantile Group surged 11.9% after saying it had received preliminary approaches from rivals Premier Miton Group and AssetCo Plc for a possible takeover.