* European equities, S&P 500 futures lower
* The new coronavirus strain closes much of the UK and overshadows US stimulus
* Pound success, talks on Brexit drag on without any agreement
* Oil and copper prices are falling; higher dollar
LONDON, Dec 21 (Reuters) – European equities fell 3% on Monday, the dollar strengthened and volatility rose among asset classes as a new, rapidly expanding strain of coronavirus Britain threatened to torpedo the optimism of the markets in the face of a surge in vaccine-fueled economic growth.
He leaned over Wall Street to open sharply below.
The strain, which is said to be up to 70% more transmissible than the original, has put some 16 million Britons under tougher closures and caused several countries to close their borders with the UK, effectively eclipsing the news positive of the United States on a much-needed stimulus bill.
The halt in international travel and the flow of goods into and out of Britain threatens chaos for British homes and businesses.
Coinciding with the lack of a post-Brexit trade deal before the December 31 deadline, it sent the pound 2.5% below $ 1.32, putting it on track for its daily drop further. great since March.
Losses of more than 3% in British stocks were caused by larger falls in British banks Lloyds and Barclays, which fell more than 6% in one stage.
European stocks fell by around 3%, travel and leisure shares lost by around 5%.
“Our main concern for the coming months in Europe would be that the UK variant (COVID-19) is already out of control on the continent, which would add to the pressure on health systems, which would force blockages still stricter in a growing economic environment. cost, ”Gilles Moëc, chief economist at AXA Investment Managers, told clients.
Market losses led to general increases in volatility, a measure of price change in an asset class, with Wall Street’s “scare manometer”, the VIX, rising nearly 40% on the day high since early November.
Currency volatility also jumped, with overnight sterling volatility approaching nine-month highs.
S&P 500 futures fell 2.5%, while Nasdaq futures fell nearly 1% as they opened more firmly when U.S. Senate Majority Leader Mitch McConnell , confirmed that Congress leaders had agreed on a $ 900 billion COVID-19 relief bill.
While safe haven assets, such as German and US government bonds, rose, gold, which typically rises in times of turbulence, reversed previous gains to fall 0.6%, up to $ 1,868.
Its weakness in a day of large equity sales will rekindle memories of the March market crash when investors sold assets en masse in a rush for the dollar.
DOLLAR TIME
The dollar positioning of speculators remains broadly bearish, meaning many could rush to cover these short trades.
The dollar index rose to 90.8, with a rise of more than half a percentage and well placed at the level of 89,723 last week, which marked the lowest since April 2018.
The euro fell 1% to $ 1,216, while the yen lost half a percentage point to $ 103.8.
U.S. and German bond yields fell, and U.S. ten-year yields fell six basis points. British two-year lending costs hit historic lows
The two- or ten-year Treasury yield curve in the United States, another indicator of growth expectations, flattened a touch. It had risen to its strongest level in almost three years on Friday amid optimism about the stimulus bill.
Turbulence may also overwhelm bullish bets on commodities such as oil and copper, which were expected to benefit from a rebound in growth next year.
Brent crude futures fell more than 3% while copper, a key barometer of economic growth, fell from the $ 8,000-per-ton mark it recently climbed for the first time since 2013.
“The message is clear: oil prices are still very high and will continue to be at the mercy of the pandemic,” said Stephen Brennock of PVM oil broker.
Sujata Rao Reports; additional reports by Wayne Cole in Sydney, edited by William Maclean