London stocks track Asia gains, no-deal Brexit fears simmer

London-listed shares followed Asian markets higher on Wednesday on hopes that working COVID-19 vaccines would speed up economic recovery, while investors held out for signs that Britain and the European Union could still agree on a Brexit trade deal. The blue-chip FTSE 100 rose 0.5%, led by financial, energy and consumer discretionary stocks, as Asian shares hit a record high following positive vaccine news.

London-listed shares followed Asian markets higher on Wednesday on hopes that working COVID-19 vaccines would speed up economic recovery, while investors held out for signs that Britain and the European Union could still agree on a Brexit trade deal.

The blue-chip FTSE 100 rose 0.5%, led by financial, energy and consumer discretionary stocks, as Asian shares hit a record high following positive vaccine news. The domestically focussed FTSE 250, considered a barometer of Brexit sentiment, added 0.4% as Prime Minister Boris Johnson prepared to travel to Brussels in a push to avoid a tumultuous Brexit without a trade deal in three weeks' time.

"The sentiment in the market is generally positive today (although) any news around the likelihood of a Brexit deal will influence UK markets today," said Simona Gambarini, markets economist at Capital Economics. The FTSE 100 has bounced from multi-year lows hit in March following the coronavirus-led global stock market crash, but it has lagged its European and U.S. peers as widespread lockdowns hammered economic growth.

Latest data showed British employers recruited fewer permanent staff during an England-wide lockdown in November, choosing temporary workers to fill the gap instead. Still, with the UK this week becoming the first country in the world to begin mass vaccination against the novel coronavirus, investors are betting that business activity will return to normal sooner than expected.

"We expect the economy to get back to its pre-virus levels around next year and don't expect any long-term scarring," Gambarini said. In company news, retailer Tesco rose 1.4% as it said it expected to complete the $10.6 billion sale of its Asian businesses to CP Group on Dec. 18, paving the way for a return of 5 billion pounds ($6.7 billion) to shareholders.