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European Stocks Sharply Lower; Omicron Concerns Intensify

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By Peter Nurse – European stock markets traded sharply lower Monday as surging numbers of Omicron-variant Covid-19 cases prompt tighter mobility restrictions, threatening the region’s economic recovery.

At 3:40 AM ET (0840 GMT), the DAX in Germany traded 2.4% lower, the CAC 40 in France fell 1.9% and the U.K.’s FTSE 100 dropped 1.9%. 

The Netherlands went into a full lockdown on Sunday, with all but essential stores closed until at least Jan. 14., providing a lead to several other European governments.

Sajid Javid, the U.K. health minister, refused on Sunday to rule out the chance that further restrictions are imposed before Christmas. This follows the Mayor of London declaring a “major incident” in the capital due to the rapid spread of the variant. Deaths in the U.K. have ticked up but hospital admissions are still within their recent ranges.

In Italy, the government is considering new measures to avoid a surge in infections during the holiday period, local newspapers reported on Sunday, while travel restrictions are now in place in a number of countries.

The World Health Organization said on Saturday that the number of Omicron cases is doubling in 1.5 to 3 days in areas with community transmission. 

On the plus side, China’s central bank cut its one-year prime rate on Monday for the first time since April 2020, boosting support for its troubled real estate sector.

In the corporate sector, the airlines sank Monday as the travel restrictions throughout the region weighed. IAG (LON:ICAG) stock fell 3.5%, Air France KLM SA (PA:AIRF) (OTC:AFLYY) stock dropped 3.2% and Lufthansa (DE:LHAG) stock slumped 4.7%.

Novo Nordisk (NYSE:NVO) stock dropped over 11% after the Danish drugmaker late on Friday announced that it will not be able to meet demand for its new weight-loss drug after supply issues in the United States.

Standard Chartered (LON:STAN) (OTC:SCBFF) stock fell 1.6% after the Bank of England fined the U.K. lender 46.6 million pounds ($61 million), a record fine, for failures in its regulatory reporting and controls.

On the flip side, BNP Paribas (PA:BNPP) (OTC:BNPQY) stock rose 0.6% after the Wall Street Journal reported that Canada’s Bank of Montreal is in advanced talks to buy the U.S. arm of the French bank, potentially valuing the unit at around $15 billion.

The economic data slate is largely empty Monday, in a holiday-shortened week, with only current account data for the Eurozone as a whole due for release.

Oil prices slumped as the rapid rise in cases in the Omicron Covid-19 variant raised concerns that the restrictions a number of countries have placed on air travel could last for some time, hitting the demand for crude. 

By 3:40 AM ET, U.S. crude futures traded 4.6% lower at $67.61 a barrel, while the Brent contract fell 4.1% to $70.53. 

Additionally, gold futures fell 0.3% to $1,800.25/oz, while EUR/USD traded 0.2% higher at 1.1265.

European Stocks Sharply Lower; Omicron Concerns Intensify

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