UPDATE 2-European shares mark worst day in 3 weeks on weak earnings, virus risks

  • Reuters
  • Stock Market News
UPDATE 2-European shares mark worst day in 3 weeks on weak earnings, virus risks
Credit: © Reuters.

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* Insurers lead declines as Swiss Re posts weak profit

* Telefonica tumbles as results fail to impress

* Number of coronavirus cases in South Korea rises

* Luxury stocks slide

* Schneider scales record high after upbeat earnings

* Auto sector sole sectoral gainer (Updates to close)

By Susan Mathew and Sagarika Jaisinghani

Feb 20 (Reuters) - European shares eased from record highs on Thursday, as a raft of disappointing earnings added to concerns about the global impact of the coronavirus outbreak after research suggested the illness is more contagious than previously thought.

The pan-European STOXX 600 .STOXX shed 0.9%, deepening losses just before close to post their biggest one-day drop in three weeks.

A near 2% fall in insurance stocks .SXIP led losses after Swiss Re SRENH.S posted a lower-than-expected annual profit. The reinsurer's shares dropped 8.1% to a five-week low.

A slide in Spain's Telefonica TEF.MC weighed on the Spanish index .IBEX after the telecoms group said one-off charges in Mexico and Argentina hurt its annual profit. is more of a bottom up day focused on results," said Ingo Schachel, head of equity research at Commerzbank (DE: CBKG ), Germany.

Meanwhile, France's Schneider Electric SCHN.PA rallied to an all-time high after its results beat expectations and the firm said it was confident it could offset the impact of the new coronavirus outbreak in China. Paris' main index .FCHI fell 0.8% as luxury stocks, which derive a chunk of their demand from Chinese customers, fell after a spike in the number of coronavirus cases outside China.

LVMH LVMH.PA , Kering PRTP.PA and spirits maker Pernod Ricard PERP.PA slid between 2.2% and 3.5%.

New research suggested the virus could spread more easily than previously believed, with South Korea and Iran reporting more cases of infection, while two passengers in a virus-hit cruise ship in Japan died. equity investors also await flash readings of the Purchasing Managers' Index (PMI) on manufacturing activity in the euro zone, due on Friday.

"The last few PMIs came in rather weaker and the market is clearly aware that risk bets due to the recent health situation will leave a mark in the PMIs," said Commerzbank's Schachel.

While traders foresee a hit to the Chinese economy from the health crisis, expectations of a pickup in growth from the second quarter have kept equity markets near record highs.

The benchmark STOXX 600 index has bounced back from a slight dip in January and is on course for its best monthly gain in a year.

Among other individual movers, British medical tech firm Smith & Nephew SN.L jumped 7.3% as its annual sales topped estimates and it forecast another year of revenue growth. Norwegian technology firm Tomra Systems TOM.OL surged 19% to top the STOXX 600 on strong quarterly results.

Insurer AXA AXAF.PA fell 3.5% as it lowered 2020 profit guidance for its companies-focused XL unit, while medical equipment maker Elekta AB EKTAb.ST slid after its quarterly operating profit undershot expectations. auto index .SXAP was the sole sectoral gainer in Europe with Renault (PA: RENA ) up 3% while Daimler DAIGn.DE rose 2.3% after saying it would slim down its Mercedes management to remove duplicate layers between Mercedes-Benz and Daimler AG.

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