European stocks seen slightly higher as new coronavirus strain weighs

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LONDON — European shares are set to open slightly higher Tuesday, attempting to recover from a brutal sell-off in the previous session, as investors sentiment was shaken by a new coronavirus strain in the U.K.

Britain’s FTSE 100 is set to open barely above the flatline at 6,420, Germany’s DAX is expected to climb 70 points to 13,320 and France’s CAC is seen rising 30 points to 5,422, according to index data from IG.

Gains are likely to be capped by ongoing concerns around a fast-spreading Covid mutation that was first identified in Britain. The new variant forced the U.K. government to shut down London and other parts of southeast England and backtrack on the mixing of households over the Christmas break.

The variant, which scientists say is up to 70% more transmissible than previous strains in the U.K., has also been identified in Italy, Netherlands, Belgium, Denmark and Australia. It has caused multiple countries around the world to shut their borders to Britain, disrupting travel and raising concerns over potential food shortages as the Brexit transition deadline nears.

Meanwhile, the U.K. and EU remain deadlocked over post-Brexit trade relations as the Dec. 31 deadline approaches, with disputes over issues such as fisheries plaguing talks. British Prime Minister Boris Johnson said Monday that the country could still crash out without a deal.

“The position is unchanged, there are problems,” British Prime Minister Boris Johnson told reporters Monday. “It’s vital that everybody understands that the U.K. has got to be able to control its own laws completely and also that we’ve got to be able to control our own fisheries.”

“It remains the case that WTO terms would be more than satisfactory for the U.K. and we can certainly cope with any difficulties that are thrown in our way.”

Sterling extended Monday’s losses on Tuesday, falling another 0.5% to around $1.34.

In Asia, shares declined amid jitters over the new coronavirus strain. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.43%.

On Wall Street, stock futures were mixed following a volatile session that saw the Dow Jones Industrial Average erase a 400-point deficit.

The muted move came as Congress on Monday night passed a coronavirus relief and government spending package. The bill now goes to President Donald Trump’s desk.

In terms of data, U.K. third-quarter GDP and German consumer sentiment figures are due at 7 a.m. London time.

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