European shares were little changed on Tuesday, as hopes of a Brexit trade deal faded amid a last-ditch attempt to find a solution, while rising coronavirus cases spurred talks of stricter curbs that could cause more economic pain.

The pan-European STOXX 600 index was trading flat, while London’s FTSE 100, which has been outperforming regional peers in recent sessions, fell 0.1%.

After British and EU leaders failed to narrow differences on Monday, they are set to meet in a final attempt to seal a deal to govern around $1 trillion in annual trade before Britain exits from the bloc at the end of the month.

The timing of the meeting is yet to be confirmed, with investors waiting to see if a decision can be made before the EU summit begins on Thursday.

Officials from both sides sounded more and more skeptical about the possibility of a deal since talks failed overnight.

“Markets have begun to price in no-deal risk again,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

“We think next week is still in play for a deal if progress can be made… UK equities are among the opportunities we highlight for the next leg up.”

The decline in the broader market came as Britain began rolling out the COVID-19 vaccine developed by Pfizer and BioNTech, the first Western country to start vaccinating its population.

Meanwhile, as infections continued to rise in Germany, Health Minister Jens Spahn said the government might tighten restrictions to control the spread beyond the partial lockdown implemented in November. A media report said the measures will be discussed this week.

The German DAX was down 0.1%.

The index has recovered about 60% from its March lows with vaccine and stimulus hopes, as well as a nascent economic recovery lifting shares. It is still off around 4% from its highest this year hit in February.

Oil and gas shares were the biggest decliners in Europe, with Total, BP and Royal Dutch Shell losing between 0.8% and 1.3% as crude prices slipped on worries over new lockdowns. [O/R]

Among individual stocks, rental equipment provider Ashtead was the biggest boost to the STOXX 600 despite a 7% drop in quarterly profit after it said it expects annual results to be ahead of expectations.

Swedish wholesaler Beijer Ref AB topped the index, gaining 7%, after private equity group EQT bought a stake in the company for about $1.1 billion.


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