European Stocks Drop as Rising Virus Cases Prompt Tighter Curbs

(Bloomberg) -- European stocks closed slightly down as the U.K. went back into a lockdown and other countries extended or tightened restrictions to halt the surge in Covid-19 infections.

The Stoxx Europe 600 Index dropped 0.2% in London, with a rally in energy shares offset by losses in utilities and media stocks.

The U.K.’s FTSE 100 Index added 0.6%, led by oil majors as OPEC+ neared its agreement to curb output next month. The FTSE 250 Index of midcap stocks climbed 0.9% after Chancellor of the Exchequer Rishi Sunak announced 4.6 billion pounds ($6.3 billion) of emergency support to help U.K. businesses survive a third lockdown.

European equities are at risk of losing the momentum that had pushed them to the highest level since the end of last February as virus infections rise. Optimism over the start of vaccinations and an economic recovery has been tempered by tougher restrictions in major economies including Germany and Italy. U.K. Prime Minister Boris Johnson has shut England’s schools and ordered people across the country to stay at home.

“The more infectious mutation is a problem for all in the U.K. and now elsewhere, while implementing a comprehensive vaccination program is proving easier said than done,” Quilter Cheviot Investment Director David Miller wrote in an email. “The valley between now and the bright future foreseen in the second half of this year is widening and deepening.”

Among individual stocks, Royal Dutch Shell Plc and BP Plc rose more than 7% and were among the biggest gainers today as the rally in crude prices accelerated.

Meanwhile in the U.S., Tuesday’s runoff elections in Georgia are set to determine whether Democrats take effective control of Congress, which could boost their ability to implement President-elect Joe Biden’s agenda, including fiscal stimulus measures.

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