London stocks gain on M&A activity, virus risks weigh

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* FTSE 100 up 0.1%, FTSE 250 adds 0.2%

Jan 25 (Reuters) - British stocks opened higher on Monday after posting losses in the past two sessions, as merger deals offered support to the indexes, although gains were capped by worries about the economic impact from surging virus cases and lockdowns.

Online fashion retailers Boohoo and ASOS jumped 4% and 2%, each. Boohoo bought the Debenhams brand, while ASOS was in talks to buy the key brands of Philip Green’s collapsed Arcadia group.

The blue-chip FTSE 100 index was up 0.1%, with mining and pharmaceutical sectors gaining the most, while the mid-cap index rose 0.2%.

Britain has detected 77 cases of the South African variant of COVID-19, the health minister said on Sunday, also urging people to strictly follow lockdown rules as the best precaution against the country’s own potentially more deadly variant.

Recruiter SThree Plc gained 0.8% after its profit, which nearly halved, still managed to beat market expectations and the company said it had resumed dividends.

Reporting by Shashank Nayar in Bengaluru; editing by Uttaresh.V