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* Call between European commission head and UK PM underway
* UK says prepared to leave EU without a trade deal
* German factories gloomier about production in coming months -Ifo
* Banks lead losses as European bond yields drop
* U.S. preparing new sanctions on Chinese officials
(Updates to close)
By Susan Mathew
Dec 7 (Reuters) - A battered pound on growing fears of Brexit without a trade deal buoyed London's blue-chip index on Monday, while other major European indexes slipped as rising tension between the United States and China sapped appetite for risky assets.
London's mid-caps index .FTMC lost over 1%, while the blue-chip index .FTSE closed up 0.1% after gaining as much as 0.8% in the session. .L
The FTSE 100 outperformed regional peers, thanks to a hammered pound as Brexit negotiators struggled over differences on fishing rights, fair competition and ways to solve future disputes. GBP/
The United Kingdom said it would not extend the Dec. 31 deadline to leave the bloc, and that it is prepared for an exit without a trade deal. All eyes were on the outcome of a call at 1600 GMT between British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen. true deadline (for a deal) will likely be at some point at the end of this week, which could mean a week full of drama," said Edward Moya, senior market analyst at OANDA in New York.
Failure to secure a deal would clog borders, upset financial markets and disrupt delicate supply chains across Europe and beyond. Fitch on Monday said a no-deal scenario would have more severe impact on UK's GDP than expected. adding about 14% over the last five weeks, the pan-European STOXX 600 index .STOXX fell up to 1% before closing down 0.3%.
Sentiment was dulled also by worries over U.S.-China relations after Reuters reported that United States was preparing to impose sanctions on at least a dozen Chinese officials over their alleged role in Beijing's disqualification of elected opposition legislators in Hong Kong. news cast a shadow on data that showed German industrial output rose much more than expected in October. Adding to the gloom, the Ifo institute said production expectations for Europe's largest economy have deteriorated for the coming months. trade-sensitive DAX index .GDAXI lost 0.2%.
Banks .SX7P led losses in Europe as euro zone bonds yields fell. Finance-heavy indexes in Spain .IBEX and Italy .FTMIB slipped more than 0.5%, while France's CAC 40 .FCHI fell 0.6% after scaling a more than nine-month high on Friday. GVD/EUR
Limiting losses, tech stocks .SX8P added 0.4%.
Oil stocks .SXEP slipped 0.4%. A continued surge in coronavirus cases globally pressured crude prices as it forced a series of renewed lockdowns. O/R
Investors also await the outcome of a European Central Bank meeting on Thursday, with more emergency bond buying and cheap liquidity for banks eyed.