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LONDON — European stocks skidded off record highs and sterling dropped more than 1% on Tuesday, as reports that Britain’s prime minister was ready to play rough in Brexit talks brought December’s cross-market rally to a halt.

U.S.-China trade optimism and reassuring Chinese economic data had driven Asia and emerging market stocks to 18-month highs, but green immediately turned red when London, Frankfurt and Paris opened.

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Britain’s FTSE 100, which had seen its best day in nearly a year on Monday, dropped 0.2% on reports that Prime Minister Boris Johnson would use his control of parliament to stop any extension of the Brexit transition period beyond 2020.

The news knocked the domestically focused mid-cap index as much 1.7% lower, while the pound fell 1% to back below $1.32 – nearly 2% under Thursday and Friday’s post-election highs of just over $1.35.

A profit warning from consumer goods giant Unilever that sent its shares down nearly 6% also helped push the broader European STOXX 600 down 0.6%.