European stocks sink further as pandemic fears hit buying (updated)

Leoni AG

25/02/2020 09:33

(For a live blog on European stocks, type LIVE/ in an Eikon
news window)
    * STOXX 600 marks lowest close since early-Dec
    * Nearly $700 billion wiped off STOXX 600 since Monday
    * Travel stocks extend sharp losses
    * Banks and insurers pressured by low bond yields

 (Adds details, updates to close)
    By Ambar Warrick
    Feb 25 (Reuters) - European shares ended at their lowest in
nearly two months on Tuesday as concerns over a coronavirus
pandemic roiled markets which had already marked enormous losses
in the prior session.
    The pan-European STOXX 600 index  .STOXX  ended 1.8% lower
as the virus' spread to shores beyond China made investors
swiftly reassess its potential economic impact. The STOXX has
seen nearly $700 billion wiped off its value since Friday's
close. 
    Hopes that the virus' impact would be limited to China, and
that any headwinds would be countered by central bank stimulus
had seen markets scale record highs, despite warnings pointing
to the contrary. 
    Banking  .SX7P  and insurance  .SXIP  shares led declines,
as a rush for safety saw a drop in bond yields.  GVD/EUR 
    "Treasury yields were already below fair value... They're
going down because they provide some insurance from large equity
market moves. But when yields fall, typically the prospects of
profitability for banks also come down, said said Andrea
Cicione," head of strategy at TS Lombard.
    Germany's Commerzbank AG  CBKG.DE  was the worst performer
on the bank index, closing about 5.8% lower, while insurers were
bottomed out by Legal & General Group PLC  LGEN.L .
    Bucking the trend, albeit slightly, Prudential Plc  PRU.L ,
ended marginally in the black after hedge fund Third Point LLC
said it had amassed a more than $2 billion stake and called on
the British insurer to split into two companies.  urn:newsml:reuters.com:*:nL2N2AO0P5
   Among individual movers, German car parts maker Leoni
 LEOGn.D  slumped 6% after reporting lower-than-expected core
profits, while UK engineering firm Meggitt  MGGT.L  slid 5%
after warning it would be hurt by the virus and Boeing's 737 MAX
problems.  urn:newsml:reuters.com:*:nL5N2AP1JB
    Sunglasses maker EssilorLuxottica  ESLX.PA  closed nearly 2%
lower after  EU antitrust regulators on Tuesday extended their
investigation into the firm's 7.2 billion-euro ($7.8 billion)
bid for Dutch opticians group GrandVision  GVNV.AS  by two
weeks.  urn:newsml:reuters.com:*:nL8N2AP06J
    Euro zone data on Tuesday was also underwhelming, with
figures showing German economic activity stagnated in the fourth
quarter due to shrinking exports.  urn:newsml:reuters.com:*:nL5N2AP1IS
    Germany's GDAXI  .DAX  fell 1.9%, while Italian shares
 .FTMIB  added to Monday's decline with a 1.4% loss amid reports
that major banks were curbing trips to the country as it plays
host to Europe's biggest coronavirus outbreak.   urn:newsml:reuters.com:*:nL8N2AP01D 
    Airline stocks, which took the biggest hit on Monday, also
fell further, with Lufthansa  LHAG.DE , EasyJet  EZJ.L  and
Ryanair  RYA.I  ending between 1.5% to 3.6% lower.

 (Reporting by Ambar Warrick and Sruthi Shankar in Bengaluru;
Editing by Sriraj Kalluvila, Patrick Graham and Angus MacSwan)
 ((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223
8780; outside U.S. +91 80 6182 2787;))