UPDATE 2-London's FTSE 100 drops on coronavirus cases, stronger pound

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* Kingfisher surges on strong sales growth
* Hut Group raises 2021 revenue forecast
* Pound jumps to six-week high against euro
* FTSE 100 down 0.7%, FTSE 250 drops 0.3%

(Updates to close)
By Shashank Nayar
Jan 12 (Reuters) - British shares dropped on Tuesday as
worries about increasing cases of COVID-19 and its impact on the
economy coupled with a stronger pound overshadowed a set of
upbeat earnings forecasts.
The FTSE 100 .FTSE fell 0.5%, led by pharmaceutical
.FTNMX4570 and household .FTNMX3720 stocks, with consumer
goods group Unilever ULVR.L the biggest drag on the index.
Finance Minister Rishi Sunak said on Monday that the economy
would get worse before it got better, with Britain in its third
lockdown to contain the spread of COVID-19. "Investors are definitely more cautious about the near term
impact of the fresh lockdowns, but the market is better prepared
to deal with it as opposed to the first lockdown last year,"
Michael Baker, an analyst at ETX Capital, said.
The pound jumped to a six-week high, weighing on the
export-heavy index, as comments from Bank of England's Governor
Andrew Bailey on negative interest rates dampened some
expectations of sub-zero rates in
Britain. In a rare bright spot, home improvement retailer Kingfisher
KGF.L rose 1.8% to the top of the FTSE 100 after reporting
strong trade across its markets. E-commerce retailer The Hut Group THG.L gained 1% after
saying it expects its 2021 revenue to be 30%-35% higher than
2020, underpinned by the acquisition of Dermstore.com and a
surge in demand for its beauty products. Gambling software maker Playtech PTEC.L jumped 4.3% after
saying it expected its 2020 performance to be ahead of
expectations, driven by its financial trading arm, and casino,
poker, bingo and betting businesses. However, British consumer spending fell in December at the
fastest rate in six months, with pubs and restaurants hard hit
by a resurgence of coronavirus cases, a survey showed.