GLOBAL MARKETS-Stocks dip as new COVID-19 strain darkens recovery prospects

By Kane Wu
HONG KONG, Dec 22 (Reuters) - Asian shares widened losses on
Tuesday, extending a pullback from multi-year highs hit last
week on fears a highly infectious new strain of COVID-19 that
hit Britain could lead to a slower global economic recovery.
Sentiment continue to sour with FTSE futures FFIc1 down
0.14% and E-mini futures for the S&P 500 index ESc1 off 0.29%,
even as the U.S. Congress on Monday approved a long-awaited $892
billion coronavirus aid package. Australia's S&P/ASX 200 .AXJO was 1.21% lower. Japan's
Nikkei 225 .N225 was down 0.77% in the afternoon session,
touching its lowest levels in two weeks, as investors took
profit from stellar gains over the past couple of months.
"Any selling is probably not going to find much resistance.
The clients I speak to are more inclined to be locking in some
gains than piling in more money," said John Milroy, investment
advisor at Ord Minnett, a Sydney-based stock broker.
MSCI's gauge of Asia Pacific stocks outside Japan
.MIAPJ0000PUS fell 0.75%. Hang Seng Index .HSI further
slipped 0.63% and China's benchmark CSI300 Index .CSI300
declined 0.35%.
"An escalation of European COVID-19 restrictions in response
to fears around a new variant, which is supposed to be faster
spreading, should, and did, of course, elicit a negative
reaction from prices via the near-term global growth impact,"
said Stephen Innes, Chief Global Market Strategist at Axi.
"Illiquid conditions will persist through year-end, but dips
like this could present more of an opportunity to fade than
anything else," he said.
Countries across the globe shut their borders to Britain on
Monday due to fears about a new strain of coronavirus, said to
be up to 70% more transmissible than the original, causing
travel chaos and raising the prospect of food shortages days
before Britain is set to leave the European Union. The discovery of the new strain, just months before vaccines
are expected to be widely available, renewed fears about the
virus, which killed about 1.7 million people worldwide. As a
result European shares fell on Monday in their worst session in
almost two months. Sterling GBP= fell as much as 2.5% to $1.3190 on virus
concerns. Against a basket of currencies =USD the dollar is
headed for a third quarterly loss in a row and is down 12.5%
from a three-year peak in March. Oil prices dropped on expectations of lower demand, with
U.S. crude CLc1 recently down 0.34% at $47.63 per barrel,
while Brent LCOc1 was 0.55% lower at $50.63.
Spot gold XAU= rose 0.1% to $1,878.15 per ounce, with the
safe-haven asset hitting a one-month high earlier in the
session.