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* New coronavirus strain 70% more transmissible
* Europe imposes travel ban on UK
* Travel stocks hit by restrictions
* FTSE 100 down 1.7%, FTSE 250 off 2.1% (Updates to market close)
Dec 21 (Reuters) - UK mid-cap stocks suffered their worst day in 3 months on Monday as stricter curbs to fight a fast-spreading new strain of the coronavirus prompted travel bans, worries about food shortages and further economic pain.
The domestically focused FTSE 250 fell 2% as the latest development in the pandemic added to investors’ worries, with no Brexit trade deal in sight and just 10 days to go until a transition period expires.
“A contraction was already looking likely in the fourth quarter and this could now extend into the new year if the lockdown continues,” said Rupert Thompson, chief investment officer at Kingswood.
Several nations closed their borders to Britain, sending the blue-chip FTSE 100 down about 1.7% despite a sharp slide in the pound.
BP and Royal Dutch Shell weighed the most on the index with Shell also taking a hit after it said it would write down the value of its oil and gas assets by $3.5 billion to $4.5 billion.
Travel and leisure stocks, including British Airways-owner IAG, easyJet and InterContinental Hotels Group , shed between 1% and 8% after countries cut transport ties with Britain.
“The key to whether the current relatively modest correction turns into something more serious will be whether the vaccine roll-out proceeds smoothly and the vaccines prove just as effective against this new more infectious mutation,” Thompson said.
Although the FTSE 100 has recovered sharply since early November, the index is on course for the worst year since the global financial crisis in 2008 as pandemic-driven lockdowns battered the economy and led to mass layoffs.
Stay-at-home winner Ocado Group jumped by about 6% while precious metal miners, including Fresnillo, added 1.6% as safe haven demand drove gold prices higher. (Reporting by Medha Singh and Shivani Kumaresan in Bengaluru; editing by Barbara Lewis)