The pound has fallen sharply and stock markets have plunged as European countries closed their borders to the UK after the discovery of a new strain of the coronavirus.
Sterling dipped by as much as two and a half cents against the US dollar to less than $1.33 on Monday and the FTSE 100 opened more than 130 points, or 2%, lower.
Aviation stocks led the sell-off with International Airlines Group, owner of British Airways, down 19% and easyJet off by 15% while engine maker Rolls-Royce lost 12%.
Banks were also among the biggest losers, with Lloyds Banking Group and Barclays down sharply - together with retail stocks such as Associated British Foods - owner of Primark - and shopping centre owner Hammerson.
Stock markets in Germany, France and Italy were down sharply in early trading too.
The FTSE 100's plunge later eased with the blow of the coronavirus restrictions cushioned for some multinationals by the fall in the pound - which tends to help their share prices.
There were also upturns for the likes of Ocado and Just Eat Takeaway whose fortunes have been boosted by lockdowns.
The pound's weakness came against a backdrop of recent volatile trading recently with hopes of a Brexit deal driving it to the highest level since 2018 against the US dollar last week.
But the imposition of tough new restrictions across parts of Britain to curb a worrying upturn in COVID-19 case numbers, and fears about the emergence of a new strain of the virus, spooked neighbouring countries and markets.
Jeffrey Halley, senior market analyst at Oanda, said: "Brexit trade deal talks remain stalled over the weekend, with time running out to approve a deal through by both sides before 31 December.
"Combined with European border closures and the UK health secretary using phrases such as 'out of control' to describe the new strain, sterling is, unsurprisingly, under pressure today."
Richard Hunter, head of markets at interactive investor, said the combination of COVID restrictions and Brexit stalemate was a "double whammy" for markets.
"The new coronavirus strain is weighing heavily on sentiment as the UK's isolation from Europe becomes increasingly physical as well as conceptual," he said.
Prime Minister Boris Johnson is to chair an emergency response meeting on later today to discuss the virus situation, with fears that a French ban on freight from the UK could result in food shortages with just a few days to go before Christmas.
Latest worries over the virus overshadowed the emergence of a deal agreed by politicians in the US on a support package worth $900bn (£630bn) to provide more support for American families and businesses hit by the coronavirus crisis.
With tougher COVID-19 restrictions being imposed in Australia, Thailand and Japan, reaction to the US package was subdued across Asian markets overnight.
https://news.google.com/__i/rss/rd/articles/CBMiZWh0dHBzOi8vbmV3cy5za3kuY29tL3N0b3J5L3BvdW5kLXdlYWtlbnMtYXMtbWFya2V0cy1iZWdpbi10by1yZWFjdC10by1ldXJvcGVzLXVrLXRyYXZlbC1iYW5zLTEyMTY5MDQ10gFpaHR0cHM6Ly9uZXdzLnNreS5jb20vc3RvcnkvYW1wL3BvdW5kLXdlYWtlbnMtYXMtbWFya2V0cy1iZWdpbi10by1yZWFjdC10by1ldXJvcGVzLXVrLXRyYXZlbC1iYW5zLTEyMTY5MDQ1?oc=5
2020-12-21 08:16:10Z
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