London stocks subdued as Brexit fears offset first vaccine approval

London-listed shares were muted on Wednesday as fears about a no-deal Brexit overshadowed news that UK had become the world's first country to approve the Pfizer-BioNTech COVID-19 vaccine.

The blue-chip FTSE 100 was up just 0.1pc and the mid-cap FTSE 250 down 0.6pc, even as the government said the vaccine would be rolled out from early next week.

The FTSE 100 had rallied more than 12pc in November, marking its best month in 31 years, as major global drugmakers announced that their vaccine candidates were effective in preventing COVID-19, sparking hopes of a faster economic rebound next year.

"There was wide belief that (a vaccine) will get rolled out soon anyway," said Graham Secker, chief European equity strategist at Morgan Stanley.

"It was the announcement of the vaccine itself that was the main catalyst rather than the subsequent approval from the government."

Investor attention this week has squarely been on Brexit negotiations with only weeks left for Britain's transition agreement to expire.

A senior British minister said there was still a chance of a no-deal Brexit as talks had snagged on fishing, governance rules and dispute resolution.

"The market probably does expect some form of thin deal (and) will be more surprised if there wasn't a deal," Secker said.

Coronavirus-related restrictions have also hit business activity and weighed on UK stock markets in recent weeks. A Reuters poll found Britain's economy will contract in the fourth quarter and it will take at least two years for GDP to reach pre-COVID-19 levels.

In company news, security group G4S jumped 7.6pc after Canada's GardaWorld raised its offer for the British company, valuing it at 3.68 billion pounds ($4.94 billion).

Stock Spirits Group gained 5.8pc after posting a higher annual core profit and proposing a special dividend on Wednesday as people stuck at home due to COVID-19 chose its local brands.