UPDATE 2-Europe stocks down with selling fever, end at near seven-month lows

  • Reuters
  • Stock Market News
UPDATE 2-Europe stocks down with selling fever, end at near seven-month lows
Credit: © Reuters.

* Oil and gas stocks lead losses as weak prices bite

* Bank stocks worst weekly performers

* Several regional subindexes firmly in bear market

* STOXX 600 clocks third weekly decline

(Updates to close)

By Ambar Warrick and Sruthi Shankar

March 6 (Reuters) - European shares plummeted on Friday amid widespread fears of the coronavirus hampering business activity, with oil and gas stocks bearing the brunt of losses after steep declines in crude prices.

The pan-European STOXX 600 .STOXX closed 3.7% down to its weakest point since mid-August 2019, ending red for the third straight week after global coronavirus cases surpassed 100,000, with the economic damage deepening as more countries imposed restrictions to curb its spread. the STOXX 600 had briefly gained this week following an emergency rate cut by the U.S. Federal Reserve, concerns over the virus' impact swiftly shunted markets lower.

"The issue that people have in situations like this is that it's very difficult to know when the bottom's going to arrive," said Craig Erlam, Senior Market Analyst at Oanda in London.

"The worst is not yet behind us because it still feels like we're in the early spread phase in many countries. If we're seeing policymakers providing stimulus, it suggests that even they believe there could be some significant damage."

Oil and gas stocks .SXEP ended more than 5% lower for the day, seeing their worst day in more than three years as oil prices plunged to their lowest since 2017 after Russia rejected a steep OPEC output cut. Crude prices were already pressured by concerns over waning global demand. O/R

London-listed Tullow Oil PLC TLW.L was the worst performer on the subindex, losing about 15%.

The banks index .SX7P underperformed its peers for the week, shedding about 8.8%. The index touched its lowest point since 2009 amid a flurry of virus-related disruptions and sinking bond yields.

Deutsche Bank DBKGn.DE fell 3.8% and Commerzbank CBKG.DE slid 7.2% as the flight to safety pushed Germany's benchmark 10-year Bund yield to record lows. GVD/EUR

Planemaker Airbus AIR.PA dived 7.6% as it failed to win any new aircraft orders in February - further evidence of disruption across aviation industries due to the spread of coronavirus. regional subindexes were trading in bear market territory.

Investors have almost fully priced in a 10 basis points cut by the European Central Bank next week. However, a recent Reuters poll of economists showed the ECB will not cut rates, underscoring the central bank's limited policy options, given its deposit rate is already at a negative 0.50%. Technologies AG IFXGn.DE fell 5.5% after reports that U.S. officials recommended blocking the German chipmaker' s proposed $10 billion deal to buy Cypress Semiconductor Corp CY.O on security risks. the few gainers, carmaker Continental AG CONG.DE and airline Air France AIRF.PA both marked modest gains for the day as they recovered from multi-year lows.

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