London stocks eke out gains as UK lockdown easing begins

(Reuters) – London’s FTSE 100 closed marginally higher on Monday, on optimism about the United Kingdom’s plans to gradually ease some coronavirus-induced curbs but investors remained wary of it potentially setting off a second wave of new infections.

FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville/File Photo

British Prime Minister Boris Johnson said on Sunday the lockdown will not end yet. He announced a limited easing of restrictions, allowing people to exercise outside more often and encouraging some people to return to work.

The FTSE 100 .FTSE edged 0.1% higher, giving back some gains after rising as much as 1% during the day. The mid-cap FTSE 250 .FTMC added 0.1%.

“When it comes to reopening the economy, there is a fear in the markets that it might be a case of one step forward and two steps backwards,” said David Madden, market analyst at CMC Markets in London.

Madden added that the easing of lockdowns has turned out to be a double-edged sword, as countries such as Germany and South Korea reported an uptick in new coronavirus infections.

The blue-chip FTSE 100 has now recovered about 20% from a March low on a raft of global stimulus, but it remains about 27% down on the year as the outbreak halts supply chains, crushes consumer spending and puts entire sectors on the verge of collapse.

British retailers warned the government on Sunday that a business bailout package of relief, grants and loans will not be enough to stop the “imminent collapse of many businesses”.

UK first-quarter GDP figures due on Wednesday are likely to underline the economic havoc wreaked by the COVID-19 pandemic, with economists fearing this year will see the worst slump in three centuries.

“The experience of countries dealing with the pandemic will be akin to a trapeze artist in the coming weeks and months as they attempt the high wire act of rebooting their economies without risking a significant second wave in the coronavirus pandemic,” said Russ Mould, investment director at AJ Bell.

On a slow company news day, gains were driven by battered life insurers .FTNMX8570, banks .FTNMX8350 and miners .FTNMX1770.

But airline stocks tumbled again as Johnson said the UK would soon need to quarantine people coming into the country by air to prevent a second wave of coronavirus infections. British Airways-owner IAG (ICAG.L) fell 3%, while EasyJet Plc (EZJ.L), shed 6%.

British bicycles and car parts retailer Halfords (HFD.L) soared 24% to a ten-month high, boosted by the government’s announcement that people should consider cycling to work when the lockdown is eased.

Reporting by Shreyashi Sanyal, Devik Jain and Sagarika Jaisinghani in Bengaluru; Editing by Anil D’Silva and Giles Elgood

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