As traders were spooked by fears about the rapid spread of the latest coronavirus mutation, London stock markets dipped deep into the red.
As Brexit concerns also weighed on trade, the slump was cushioned somewhat by a decline in the pound, but the overall atmosphere was still grim enough to be felt across the continent.
The largest losses were suffered by shares of airlines, tour operators and retailers as they absorbed the effects of Tier 4 constraints, supply chain issues and travel bans.
At the end of trading on Monday, the FTSE 100 closed 112.86 points lower at 6,416.32.
“Health concerns have come to the forefront of the minds of traders again as the new strain of Covid-19 making the rounds in the UK has led to tighter restrictions,” said David Madden, market analyst at CMC Markets UK.
It is bad enough that most of the UK is facing stricter restrictions because of worries about the rapidly spreading strain of coronavirus, but now several countries are also distancing themselves from the UK.
“The isolation treatment the U.K. is experiencing has shaken market confidence across Europe,” he said.
“With the new strain of Covid-19 at the root of the problem, there are fears that other countries may already be infected.”
Sterling plummeted as Boris Johnson said that, while the pandemic is exacerbating disruptions at British ports, he will not give in to demands to prolong the Brexit transition period.
The pound fell to 1.334 against the U.S. dollar by 0.42 percent and was down to 1.091 by 0.45 percent against the euro.
Elsewhere in Europe, despite the EU authorities approving the Pfizer-BioNTech vaccine, the other big markets were all weighed down by the general gloom of sentiment.
The Dax of Germany dropped 2.82 percent and the Cac of France fell 2.43 percent .
The Dow Jones also opened in the red across the Atlantic as the healthcare crisis overshadowed the agreement of U.S. lawmakers on their $900 billion aid package.
Sports Direct owner Frasers Group’s stock slumped after the firm became the first retailer to warn that new Tier 4 initiatives have contributed to recent forecasts being cancelled.
The company’s shares dropped 49.4 pence to 425.6 pence after the company said its reported prediction of a 20 percent to 30 percent increase in profits this year was unlikely to be reached.
After the challenger bank sold a mortgage book to NatWest Group for £ 3,1 billion, Metro Bank grew in value.
After the transaction was reported, shares closed 26.5 pence higher at 141.3 pence.
Shares in online rail ticket provider Trainline plummeted after Christmas travel plans were scuppered by the health crisis and the transport secretary later said that cancelled train journeys would be refunded to passengers. Shares declined 49 to 417.8 pence.
Oil prices were lower as concerns rose that higher travel restrictions would affect demand again.
The price of a Brent crude oil barrel dropped 0.12 percent to $49.99.
Ocado, up 123 pence to 2,332 pence, Fresnillo, down 26 pence to 1,165.5 pence, Just Eat Takeaway, down 150 pence to 8,120 pence, and Reckitt Benckiser, up 78 pence to 6,532 pence, were the biggest risers in the FTSE 100.
IAG, down 12 pence at 143.9 pence, Royal Dutch Shell B, down 76 pence at 1,265 pence, Royal Dutch Shell A, down 69 pence at 1,312 pence, and BP, down 13 pence at 258.05 pence, were the main losers in the FTSE 100.