UPDATE 2-London's FTSE 100 drops to near three-week low as virus risks weigh

  • Reuters
  • Stock Market News
UPDATE 2-London's FTSE 100 drops to near three-week low as virus risks weigh
Credit: © Reuters.

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* Fashion retailers Boohoo and ASOS surge on merger deals

* Recruiter SThree gains after resuming dividends

* UK looks at toughening border quarantine rules

* FTSE 100 down 0.8%, FTSE 250 falls 1.2% (Updates to close)

By Shashank Nayar

Jan 25 (Reuters) - British stocks ended lower on Monday, with travel stocks leading the declines, as rising coronavirus infections and extended lockdowns raised worries of prolonged economic pain, while fashion retailers Boohoo and ASOS gained on merger deals.

British Prime Minister Boris Johnson said he was looking at toughening border quarantine rules because of the risk of "vaccine-busting" new coronavirus variants. blue-chip FTSE 100 index .FTSE fell 0.8%, declining for the third consecutive session, with travel .FTNMX1770 and energy .FTNMX0530 stocks falling the most, while the mid-cap index .FTMC dropped 1.2% to a one-month low.

"Stock markets are crawling between optimism around the rollout of vaccines and worries that a jump in virus infections and fresh local lockdowns could further affect economic recovery prospects," said David Madden, an analyst at CMC (NS: CMC ) Markets.

Britain has detected 77 cases of the South African variant of COVID-19, the health minister said on Sunday while urging people to strictly follow lockdown rules as the best precaution against the country's own potentially more deadly variant. FTSE 100 lost 14.3% in value last year, its worst performance since a 31% plunge in 2008 and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy.

"Once again the optimism generated by the vaccine breakthroughs at the end of 2020 is colliding with the reality of inoculating populations and dealing with the new variants of COVID-19," said Russ Mould, investment director at AJ Bell.

Online fashion retailers Boohoo BOOH.L and ASOS ASOS.L surged 4.7% and 5.6%, each. Boohoo bought the Debenhams brand, while ASOS was in talks to buy the key brands of Philip Green's collapsed Arcadia group as the COVID-19 pandemic turbocharges the industry's shift to digital. SThree Plc STEMS.L gained 3.5% after its profit, which nearly halved, still managed to beat market expectations and the company said it had resumed dividends.

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