Europe midday: Shares slide into the red on Covid fears, UK borrowing

European shares moved into the red by lunchtime on Friday as the rising number of coronavirus cases across the continent and higher UK borrowing figures dampened sentiment.

The pan-European Stoxx 600 index was down 0.94% week all major Continental bourses lower. Spain’s Ibex gave up early gains as hospitalisation rates rose and the FTSE 100 also declined as the UK reported the highest number of new coronavirus cases in a single day since the pandemic began.

Investors were digesting the latest figures from Britain’s Office for National Statistics, which showed the government borrowed £35.9bn in August - the third highest monthly figure on record - as tax revenue fell and it spent to deal with the economic effects of the Covid-19 crisis.

August's net borrowing figure was a record for the month and £30.5bn more than a year earlier. But the total was less than in March and April as the economy picked up and some workers returned to work from furlough. It was also less than the average economists' forecast of £38bn.

France's CAC40 fell after the country also set a new record of daily infections and the Prime Minister Jean Castex warned on Thursday that the government could be forced to reconfine areas.

UK airline, retail, and hospitality stocks were all under pressure as the government imposed minor new restrictions, with concern rising that tougher measures may have to be introduced to stymie the spread of the virus. Finance Minister Rishi Sunak announced new stimulus measures on Thursday to protect what he called "viable" jobs.

“Unemployment is a ticking time-bomb. (Sunak’s) job-saving programme cannot save the U.K. from facing a higher unemployment rate, and this increase in the unemployment rate is going to have an adverse effect on the economy. Hence, sterling's upside is really limited, especially taking into consideration that the Brexit deadline is just around the corner, with no deal in place,” said Naeem Aslam, Chief Market Analyst at Avatrade.

In corporate news travel stocks were under the cosh, with Ryanair, easyJet, Lufthansa and Frankfurt airport operator Fraport all lower. SSP, which runs restaurants and cafes at airports and train stations, was also in decline after poor numbers this week, and French hotel group Accor also declined.

Shares in Spanish telephone operator MasMovil rose after reports that Vodafone had started talks to buy the company. Vodafone was also higher on the news.