European stocks declined on Thursday, dragged down by a 1.7% fall of the FTSE 100
index a few hours before the U.K. leaves the European Union’s single market and customs unions, and just as the country is moving to new severe restrictions due to coronavirus concerns.
The pan-European Stoxx 600
index was down 0.3% in thin trading on a day when some major European exchanges are closed, such as Frankfurt, or operate on a shortened trading day, as in Paris.
In the latest development of a 16-year trans-Atlantic dispute over public subsidies to aircraft manufacturers Airbus
the U.S. administration said overnight that it would raise tariffs on additional European goods, including sparkling wines and brandies from France and Germany.
The French CAC 40
index opened down 0.4%, with shares of French drinks maker Pernod Ricard
falling 1.4% while U.K. competitor Diageo
was down 2.6% in London trading.
Meanwhile, French luxury-goods makers LVMH
and Hermès International
were among the top risers on the Paris stock exchange.
LVMH, the owner of brands such as Louis Vuitton, Christian Dior and Moët Champagne, said it would close its acquisition of Tiffany on Jan. 7, after shareholders of the U.S. jeweler “overwhelmingly” approved its revised offer on Wednesday.
The U.K. House of Commons on Wednesday massively voted to ratify the U.K.-EU trade deal concluded last week, which became law in the early hours of Thursday, clearing the way for an orderly exit from the European markets. But investors in London focused on another layer of strict measures announced by the government, such as a postponement of school openings due next week.
International Consolidated Airlines
the owner of the U.K.’s flagship carrier British Airways, was among the biggest decliners in London, down more than 3% on concerns about more reduced travel in the first half of 2021.
The shares of AstraZeneca
the pharmaceuticals group whose COVID vaccine was approved earlier this week by the U.K. regulator, were down 1.8% after a top Trump administration official indicated that Americans wouldn’t get the vaccine before April, as doubts remain about its effectiveness.
The London Stock Exchange was on track to end the year having significantly underperformed all other major European bourses, with the FTSE 100 having lost 15% in 2020, compared with an 8% decline for the French CAC40 and a 2.5% rise of Germany’s DAX
The opening of trading on Jan. 4 after the year-end market closure will mark the first day of the London Stock Exchange operating outside the EU’s regulatory area, and the end of the direct access to European markets that U.K.-based financial players enjoyed before Brexit. Billions of pounds of trading are expected to move to continental exchanges