* European equities, S&P 500 futures declined
* New strain of coronavirus shuts down much of UK, overshadows US stimulus measures
* Pound hit, Brexit talks dragging on with no deal
* Oil, copper prices fall; dollar higher
LONDON, Dec 21 (Reuters) – European equities are down 3% on Monday, the dollar has strengthened and volatility has risen across asset classes as a rapidly spreading new strain of coronavirus in Britain threatened to torpedo market optimism about a vaccine-fueled recovery in economic growth.
Wall Street was tipped to open sharply lower.
The species, which is said to be up to 70% more transferable than the original, has closed about 16 million Britons more severely and has prompted several countries to close their borders to the UK, basically overshadowing positive US news of a much-needed stimulus bill .
The halting of international travel and the flow of cargo in and out of Britain is threatening chaos for British households and businesses.
Coinciding with the lack of a post-Brexit trade deal before the December 31 deadline, it sent the pound down 2.5% below $ 1.32, putting it on track for its biggest daily drop since March.
Losses of more than 3% on UK equities were caused by bigger falls at UK banks Lloyds and Barclays, both of which fell more than 6% at one point.
European stocks fell about 3%, travel and leisure stocks lost about 5%.
“Our main concern for the coming months in Europe would be that the UK (COVID-19) variant is already out of control on the continent, adding pressure on healthcare systems and forcing even tighter lockdowns amid growing economic costs. , ”Gilles Moëc, chief economist at AXA Investment Managers, told clients.
Market losses drove an increase in volatility across the board, a measure of price movements in an asset class, with Wall Street’s “fear meter” VIX rising nearly 40% on its highest day since early November.
Currency volatility also increased, with overnight volatility of the British pound approaching its nine-month high
Futures for the S&P 500 were down 2.5%, while Nasdaq futures were down nearly 1%, after opening more firmly when US Senate leader Mitch McConnell confirmed that Congress leaders passed a COVID-19 bill. about $ 900 billion.
While safe-haven assets such as German and US government bonds recovered, gold, which tends to rise in times of turmoil, returned previous gains and fell 0.6% to $ 1,868.
His weakness on a day of a major stock sell-off will bring back memories of the slump in March, when investors sold massive assets in a rush for the dollar.
DOLLAR TIME
Speculators’ dollar position remains broadly bearish, meaning many could rush to hedge those short trades.
The dollar index rose to 90.8, up more than half a percent and off well from last week’s 89,723 level which was the lowest since April 2018.
The euro fell 1% to $ 1,216, while the yen lost half a percent at 103.8 per dollar.
US and German bond yields fell, while US 10-year yields fell six basis points. The UK financing costs hit rock bottom over two years
The US two-year / 10-year Treasury yield curve, another indicator of growth expectations, flattened somewhat. It had risen to its steepest level in nearly three years on Friday amid optimism about the stimulus bill.
The turmoil may also turn bullish bets on commodities such as oil and copper, which are expected to benefit from a pick-up in growth next year.
Futures on Brent crude oil fell more than 3%, while copper, a major barometer of economic growth, fell from the $ 8,000 per ton it recently scaled for the first time since 2013.
“The message is clear: oil prices are still very high and will be at the mercy of the pandemic,” said Stephen Brennock of oil broker PVM.
Reporting by Sujata Rao; additional reporting by Wayne Cole in Sydney, published by William Maclean