UPDATE 2-London's FTSE 100 drops to near three-week low as virus risks weigh

(For a Reuters live blog on U.S., UK and European stock
markets, click LIVE/ or type LIVE/ in a news window)
* Fashion retailers Boohoo and ASOS surge on merger deals
* Recruiter SThree gains after resuming dividends
* UK looks at toughening border quarantine rules
* FTSE 100 down 0.8%, FTSE 250 falls 1.2%

(Updates to close)
By Shashank Nayar
Jan 25 (Reuters) - British stocks ended lower on Monday,
with travel stocks leading the declines, as rising coronavirus
infections and extended lockdowns raised worries of prolonged
economic pain, while fashion retailers Boohoo and ASOS gained on
merger deals.
British Prime Minister Boris Johnson said he was looking at
toughening border quarantine rules because of the risk of
"vaccine-busting" new coronavirus variants. The blue-chip FTSE 100 index .FTSE fell 0.8%, declining
for the third consecutive session, with travel .FTNMX1770 and
energy .FTNMX0530 stocks falling the most, while the mid-cap
index .FTMC dropped 1.2% to a one-month low.
"Stock markets are crawling between optimism around the
rollout of vaccines and worries that a jump in virus infections
and fresh local lockdowns could further affect economic recovery
prospects," said David Madden, an analyst at CMC Markets.
Britain has detected 77 cases of the South African variant
of COVID-19, the health minister said on Sunday while urging
people to strictly follow lockdown rules as the best precaution
against the country's own potentially more deadly
variant. The FTSE 100 lost 14.3% in value last year, its worst
performance since a 31% plunge in 2008 and underperforming its
European peers by a wide margin, as pandemic-driven lockdowns
battered the economy.
"Once again the optimism generated by the vaccine
breakthroughs at the end of 2020 is colliding with the reality
of inoculating populations and dealing with the new variants of
COVID-19," said Russ Mould, investment director at AJ Bell.
Online fashion retailers Boohoo BOOH.L and ASOS ASOS.L
surged 4.7% and 5.6%, each. Boohoo bought the Debenhams brand,
while ASOS was in talks to buy the key brands of Philip Green's
collapsed Arcadia group as the COVID-19 pandemic turbocharges
the industry's shift to digital. Recruiter SThree Plc STEMS.L gained 3.5% after its profit,
which nearly halved, still managed to beat market expectations
and the company said it had resumed dividends.