Markets drop as new restrictions dampen recovery hopes

Global stock markets have dropped as tightening restrictions to battle a second wave of coronavirus cases dampened hopes of economic recovery.

Britain’s FTSE 100 index was 2% lower with steep sell-offs also seen across Europe with Paris going into curfew and London and Manchester facing tougher rules.

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Further gloom came as hopes for a fresh US economic stimulus package fizzled out and progress on Brexit talks remained elusive.

Russ Mould, investment director at AJ Bell, said: “Investors were greeted with a sea of red as global equity markets slumped on Thursday.

“It is becoming more apparent that the pandemic could still be raging well into 2021 and so economic prospects have become even more clouded.

“There were also negative comments from US Treasury Secretary Steven Mnuchin that a big stimulus deal was unlikely before next month’s Presidential election, in line with previous comments from Donald Trump.

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“Ultimately investors are unnerved by what’s going on with COVID-19 and how that is negatively impacting jobs and the ability for many businesses to succeed.”

In London, the fallers were led by consumer stocks such as Premier Inn owner Whitbread and luxury fashion group Burberry – each down about 5%.

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Catering giant Compass and British Airways owner International Airlines Group were also on the back foot.

There was only one riser on the FTSE 100 – Just Eat Takeaway, after earlier this week reporting strong growth in demand on its meal delivery platform over recent months.

Elsewhere, markets in Paris, Frankfurt and Milan were more than 2% lower.

The sell-off came after more jobs gloom in the UK, with pub and brewery group Marston’s blaming tougher restrictions as it said more than 2,000 workers faced the axe.

Meanwhile Dublin-based airline Ryanair said more unpaid leave, job sharing and redundancies were on the cards as it slashed its winter capacity to 40%, blamed on travel rules.