UPDATE 3-Pandemic fears pummel European stocks into correction territory

  • Reuters
  • Stock Market News
UPDATE 3-Pandemic fears pummel European stocks into correction territory
Credit: © Reuters.

(For a live blog on European stocks, type LIVE/ in an Eikon news window)

* Travel and leisure, basic resources stocks worst hit

* WPP leads losses on STOXX 600 after bleak forecast

* Standard Chartered , AB InBev latest victims of virus damage

* Hikma Pharma tops STOXX 600 on annual earnings beat (Adds details, updates to close)

By Ambar Warrick and Thyagaraju Adinarayan

Feb 27 (Reuters) - European stocks marked their weakest close in more than four months on Thursday, sinking into correction territory as a jump in coronavirus cases outside China deepened fears of an economically damaging pandemic.

Investors typically consider a correction in a security or index to be a drop of 10% or more from its recent peak.

The pan-European STOXX 600 index .STOXX , which retreated 3.8% for the day, has fallen more than 10% from a record high hit on Feb. 19.

While strong earnings had caused investors to pause selling on Wednesday, a spike in infections outside China, particularly in Italy, saw markets slip back into red.

"From the unshakeable optimism seen at the beginning of the year, investors have done a complete U-turn switching from excessive optimism to outright pessimism in less than a week," Michael Hewson, chief market analyst at CMC (NS: CMC ) Markets UK, said.

Thursday's sell-off saw more than 97% of the pan-European STOXX 600 .STOXX index's constituents trading red, with basic resources stocks .SXPP among the worst performers as commodity prices plunged amid fears of sustained disruptions in the global supply chain.

"The sell-off in the base metals complex over the last few days largely reflects the heightened risk-off sentiment or 'fear-factor' across broader riskier assets," Wenyu Yao, senior commodities strategist at ING wrote in a note.

London-listed miner Evraz Plc EVRE.L was the worst performing stock in the sector after it posted weak 2019 earnings. stocks .SXPP also plummeted, with casino operator Evolution Gaming Group EVOG.ST leading declines. The sector has shed nearly 15% this week, underperforming its peers by a wide margin.

Standard Chartered STAN.L fell 3.5% after the bank said a key earnings target would take longer to meet as the epidemic adds to headwinds in China and Hong Kong. The broader bank sector .SX7P was also pressured by a drop in bond yields. GVD/EUR

The world's largest beer maker, Anheuser-Busch InBev ABI.BR , plunged nearly 11% after it forecast muted growth in 2020, due in part to the outbreak. major WPP WPP.L tumbled 16%, marking its worst day since August 1992, after saying it would target flat organic growth and profit margins in 2020. The stock was the worst performer on the STOXX 600. shares .FTMIB , which entered correction territory on Wednesday, fell 2.7% as the country reported another 100 coronavirus cases nationwide, taking the total to more than 400.

In a sole bright spot, Hikma Pharmaceuticals HIK.L rose 4.6%, topping the STOXX 600 after it beat expectations with its annual earnings.

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