Europe open: Shares slide as no-deal Brexit prospect spooks investors

European shares opened lower on Friday as nervous investors eyed the stalled Brexit talks, rising Covid-19 cases globally and no signs of a US fiscal stimulus package.

The pan-European STOXX 600 had slid 1% lower after closing lower on Thursday in response to a grim economic forecast for next year from the European Central Bank.

Sentiment was also hit by news that a Covid-19 vaccine being developed by Sanofi and GlaxoSmithkline had been delayed as it did not provide a sufficient immune response in elderly people. Sanofi shares were down 2% on the news while Glaxo stock was slightly lower.

Brexit trade talks appeared to be heading nowhere as a Sunday deadline loomed, with the UK suggesting a no-deal departure from the EU was likely.

"The increasing possibility of a no-deal outcome will add further fuel to bears of a UK economy already weighed down by a difficult road to economic recovery," said Richard Hunter, head of markets at Interactive Investor.

"Ironically, this has had a marginally positive effect on the FTSE100 given the exposure of the index to overseas earnings, with the drop of 13% in 2020 representing some improvement from the lower levels of earlier in the year."

Banks and housebuilders slumped amid Brexit worries, with Barclays, Lloyds, NatWest, Persimmon, Taylor Wimpey and Barratt Developments all weaker.

Rolls-Royce shares fell despite the company saying it expected to turn cash flow positive in the second half of 2021 as air travel demand started to recover from the Covid-19 crisis driven by vaccination programmes.

It also maintained full-year guidance, adding it was targeting at least £750m in free cash flow, excluding disposals, as early as 2022 and at least £2bn from disposal proceeds.

Bellway was in the red even after saying it expected annual volumes to rise by a quarter as the stamp duty holiday and government help drove higher demand for new homes. The company said its forward order book was up 18.7% to £1.77bn in the 17 weeks to November 2

On the upside, Calisen shares surged after it agreed to be bought by a consortium of investors in a deal that values the smart meter company at £1.4bn.

Elsewhere, meal-kit delivery company HelloFresh rose 7%, prompting rises in Just Eat Takeaway, Delivery Hero and online supermarket Ocado - all of which have benefited from Covid-19 restrictions and lockdowns.

(Michele Maatouk also contributed to this report)