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British stocks drop as prospect of no-deal Brexit grows

Politics Dec 11, 2020 17:20
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© Reuters. A broker reacts on the IG Index the trading floor

By Sagarika Jaisinghani and Shashank Nayar

(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 (LON:RR) 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 (LON: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 (NYSE:MS) 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 (PA:SASY) 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.

British stocks drop as prospect of no-deal Brexit grows
 

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Comments (1)
Paul Parkinson
Paul Parkinson Dec 11, 2020 9:37
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Misleading headline as usual. Brexit doesn’t hang in the balance, Brexit has been acheived, we left the EU last February. A FTA is in the balance simply put because the LPF the EU wants is a trap.
David Hawley
David Hawley Dec 11, 2020 9:37
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Actually aren't we still in the EU until 31st Dec? The term Brexit covers the divorce agreement. But I agree, the EU are being unreasonable and underhsnd
Stanely Dorasamy
Stanely Dorasamy Dec 11, 2020 9:37
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Well maybe there will some peace in the EU without constant bickering ..
peter bham
peter bham Dec 11, 2020 9:37
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wishful thinking
 
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