News: RIO UPDATE 2-Commodity-linked shares lift FTSE 100, AO World plummets on shortages warning

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• European stocks hit by renewed fears around COVID-19
• River and Mercantile Group rises on two takeover approaches
• FTSE 100 up 0.3%, FTSE 250 off 0.7%

(Updates to close)

UK's FTSE 100 rebounded to end higher on Tuesday as gains in mining and energy shares countered fears over a resurgence in COVID-19 cases in Europe, while online electricals retailer AO World plummeted after warning of product shortages.

After falling as much as 0.7%, the blue-chip FTSE 100 .FTSE ended 0.3% higher, aided by advances in miners including Rio Tinto RIO.L , BHP Group BHPB.L , Glencore GLEN.L and oil majors BP BP.L and Royal Dutch Shell RDSa.L .

However, investor sentiment was in check as continental Europe, where German .GDAXI and French .FCHI stocks were down on concerns about fresh restrictions amid a resurgence in COVID-19 cases.

"The fourth wave of COVID being endured in parts of Continental Europe is prompting the reintroduction of restrictions and resulting civil unrest, threatening its economic recovery," said Russ Mould, investment director at AJ Bell.

British minister Robert Courts said on Monday the UK was looking to review its COVID-19 travel rules in January.

Britain has lagged European peers in lifting travel restrictions with airlines complaining that the need for day-2 coronavirus tests and complicated passenger locator forms have deterred UK travel.

The FTSE 100 has advanced 11.6% so far this year, helped by robust corporate earnings and record low interest rates. However, it continues to underperform its European peers as supply chain constraints and inflationary worries weigh on businesses.

Meanwhile, euro zone business growth unexpectedly accelerated this month but another wave of coronavirus infections and new restrictions, alongside price pressures, are likely to put a dent in December's expansion, a survey showed.

The domestically focussed mid-cap index .FTMC declined 0.7%, with AO World AO.L plunging 15% after it cut its fiscal 2022 profit outlook due to supply chain issues and warned of product shortages ahead of the key holiday shopping season.

Shares of Compass Group CPG.L reversed early losses to end 6% higher after Chief Executive Dominic Blakemore said new business will help the British caterer regain its pre-pandemic size and grow faster than before.

In M&A news, fund manager River and Mercantile Group RIV.L surged 8% after saying it had received preliminary approaches from rivals Premier Miton Group PMIP.L and AssetCo Plc ASTO.L for a possible takeover.

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