UK blue-chip stocks fell to a near three-week low on Monday as a fast-spreading new strain of the coronavirus prompted tougher restrictions, while a fresh ban on travellers from Britain hammered airline and oil stocks.

The FTSE 100 touched its lowest since Dec. 2 in early trading, but clawed back some of its losses to trade down 1.2% as the pound's 2% drop limited a fall in the exporter-heavy index.

BP and Royal Dutch Shell were the biggest drags on the index as oil prices fell more than 3% on the latest round of European restrictions.

Shell also took a hit from its move to write down the value of its oil and gas assets by $3.5 billion to $4.5 billion following a string of impairments this year.

British Airways-owner IAG and easyJet fell about 8%, while InterContinental Hotels Group dropped 4% after its European neighbours and other countries cut transport ties due to fears about the new coronavirus strain.

"We are in the middle of a perfect storm of both COVID-19 and Brexit," said Stefan Koopman, senior market economist at Rabobank. "It is catastrophic as the entire island is cutoff from the continent and that has repercussions on the market."

The FTSE 100 has lost 14.3% so far this year and is on course for the worst year since the global financial crisis in 2008-09 as pandemic-driven lockdowns battered the economy and led to mass layoffs.

The domestically focused FTSE 250, considered a barometer for Brexit sentiment, shed 1.9% with no Brexit trade deal in sight and just days to go until a transition period expires at the end of the year.

Pub groups JD Wetherspoon and Mitchells & Butlers were also a drag on the index due to worries about the latest restrictions.