Europe close: Covid-19 worries continue to drag on sentiment

European shares slipped on Tuesday as continuing concerns about the Covid pandemic and poor UK retail sales put the brakes on sentiment.

The pan-European Stoxx 600 index was up 0.07% to 408.69, with Germany’s DAX slipping by 0.08% to 13,925.06 while London’s FTSE 100 was down almost 0.65% at 6,754.11.

London stocks faced the double whammy of worries about the pandemic and potential for tighter restrictions, as investors digested dire UK retail sales figures.

Market participants were mulling over industry research showing that UK retail sales slumped to a record low in 2020, after the high street saw little festive cheer in December.

Nonetheless, according to Pantheon Macroeconomics's the daily rate of noval coronavirus infections in Britain might be in the process of peaking.

According to the latest BRC-KPMG retail sales monitor, total sales increased 1.8% in December. That was an improvement on December 2019’s 0.2% uptick, and above the 12-month average decline. But it was below the three-month average of growth of 2.5%. On a like-for-like basis, sales rose 4.8% year-on-year.

In equity news, shares in miniature wargames manufacturer Games Workshop were down 6.7% despite the company reporting a better first-half performance than it had been expecting, as the group continues to benefit from Covid-19 restrictions and lockdowns.

B&Q owner Kingfisher rallied after saying it expected current year profits to be at the top end of forecasts as fourth quarter like-for-like sales rose 16.9%, driven by people purchasing online. Current sell-side analyst expectations for full-year adjusted profit before tax is £667m to £742m, according to company-compiled consensus estimates at January 4.

Danish shipping company Maersk rose 3.4% after an upgrade to “buy” from broker Berenberg, saying earnings momentum driven by freight prices could see the stock run higher.