London pre-open: Stocks seen lower amid Covid worries
London stocks were set to fall at the open on Monday amid worries about a new Covid strain and as London and the South East were plunged into Tier 4 over the weekend.
The FTSE 100 was called to open 61 points lower at 6,468.
CMC Markets analyst David Madden said: "With respect to the restrictions in the UK, things have gone from bad to worse. London and large swathes of south east England have entered Tier 4. The Scottish government is advising people not to enter the country, while Wales has heightened restrictions too. Rising case numbers because of the new Covid-19 strain brought about the new measures. On account of the alarming health situation, several European nations have banned flights from the UK - some will only last for 48 hours. France has also banned human handled freight so that will cause chaos at the ports."
Meanwhile, Brexit talks were set to continue after EU negotiator Michel Barnier said they had reached a "crucial" stage.
"Even though yesterday was originally cited as the deadline for UK-EU trade talks, it is understood that differences still remain and that discussions will continue today," said Madden. "Given how things have gone so far, it was hardly a surprise. This comes at a time when many countries in mainland Europe are also struggling to keep a lid on their own situation - a number of countries have extended their lockdowns into mid-January. The airline sector is likely to be in focus today for all the wrong reasons. The British government admitted that Tier 4 restrictions could remain in place until Easter 2021."
In corporate news, Mike Ashley’s Frasers Group said it was pulling full-year guidance after the UK government closed non-essential retail stores in response to a new variant of the coronavirus breaking out in London and the South East.
The company, which includes the Sports Direct chain, had guided for a 20% - 30% improvement in underlying core earnings during full-year 2021.
NatWest has entered into an agreement with Metro Bank to acquire a £3bn portfolio of prime UK mortgages.
The FTSE 100 bank said the portfolio consisted of owner-occupied residential mortgages, with a weighted average current loan-to-value of about 60%.
It said the purchase price of £3.1bn represented a 2.7% premium on gross book value, with the impact of the transaction, based on NatWest's CET1 ratio on 30 September, equating to a reduction of around 15 basis points.