Europe midday: Shares pare gains on reports of Brexit deal setback
European shares slipped from morning highs at midday as the EU appeared to reject a UK offer on fishing rights in the Brexit trade talks.
The pan-European Stoxx 600 index was up 0.77% as investors also eyed a new strain of the coronavirus in the UK which saw 40 nations shut their borders in response. The UK’s FTSE 100 index had pulled itself up by 0.3%, assisted by a revision upwards in third quarter GDP figures and seemed to take the Brexit news in stride.
Germany’s DAX was up 0.9% and France’s CAC 40 0.83%. US Dow Jones futures were slightly lower.
The pound was 0.3% lower against the dollar at 1.3427 and 0.4% weaker versus the euro at 1.0956 after the European Union reportedly rejected the UK’s latest concessions on fishing.
On Monday, the UK made a proposal that would see the EU reduce the value of the fish it catches in UK waters by 30%, down from the 60% cut it was insisting the EU accept last week. However, reports said this had been rejected and EU Brexit negotiator Michel Barnier would update EU member states on Brexit talks this afternoon.
The UK and the EU have until December 31 to agree a trade deal. On Monday, the British government insisted it would not extend the transition period despite growing calls for the deadline to be pushed back.
On the macroeconomic front, UK GDP rose by 16% in Q3, up from an initial estimate of 15.5%. This means the economy is still 8.6% below where it was at the end of last year, up from an initial estimate of 9.7% below.
Separate data showed that government borrowing rose to £31.6bn in November, compared to consensus expectations of £31.4bn. This was a £26bn increase on November 2019, which is both the highest November borrowing and the third-highest borrowing in any month since monthly records began in 1993.
In equity markets, video game maker CD Projekt shares rebounded 7% after last weeks sell off in response to problems with its much-hyped Cyberpunk2077 release.
Banks were among the top gainers after heavy declines on Monday, with Lloyds, Barclays and NatWest all higher.
British Airways and Iberia owner IAG and engine maker Rolls-Royce also gained after sharp falls in the previous session.