By Sruthi Shankar
(Reuters) – European shares headed lower on Thursday, as a slump in British stocks and profit warnings from several companies soured market sentiment even after central banks this week tried to ease the blow of the coronavirus outbreak on global growth.
The main European equity benchmark <.STOXX> reversed early gains to trade down 0.8%.
London’s FTSE 100 <.FTSE> fell 1.3%, with several companies including Evraz Plc
Among euro zone stocks, German auto supplier Continental
The broader automakers index <.SXAP> dropped 2.2%, while miners <.SXPP> fell 2.8%, leading declines among the STOXX 600 subsectors.
In a sign of deep damage to the travel industry, British regional airline Flybe collapsed, making the struggling carrier the industry’s first big casualty of the outbreak.
Following late February’s rout that pushed European markets into correction territory, markets stabilised somewhat this week as investors were hopeful stimulus measures from governments and central banks would protect the global economy.
Analysts firmly expect the European Central Bank to cut interest rates by 10 basis points next week, joining the U.S. Federal Reserve and its peers in Canada and Australia in reducing borrowing costs.
“The Fed has some room to ease further, but Europe doesn’t have a lot of room,” said Artur Baluszynski, head of research at Henderson Rowe.
“If we see a round of disappointing earnings or outlooks this earnings season, we might see markets moving from the narrative of ‘we need easy money’ to ‘we need some serious fiscal stimulus'”.
The outbreak shows little signs of peaking globally, with Italy closing all schools and California declaring a state of emergency.
Ratings agency S&P Global halved its eurozone growth forecast for the year to 0.5% from 1% on Wednesday and predicted a 0.3% contraction for hard hit Italy.
British commercial broadcaster ITV
German broadcaster ProSiebenSat.1 Media
Among stocks in the black was science and technology company Merck KGaA
(Reporting by Sruthi Shankar in Bengaluru; editing by Patrick Graham and Bernard Orr)