Europe close: Early bounce dissipates amid new containment measures in Spain and Italy
Stocks on the Continent surrendered early gains amid reports of divisions in the US Congress regarding the need for stimulus measures to help the economy and signs that the oil price war between Russia and Saudi Arabia may just be starting to get underway.
Nonetheless, a further decline in new coronavirus cases in the People's Republic of China was reported overnight, alongside new containment measures in Italy and Spain, including a ban by Madrid on flights between the two countries.
There was also ongoing speculation that central banks around the world would step up the plate, with many analysts holding out the possibility that the Federal Reserve, for one, might be set to lower official short-term interest rates to zero by year-end 2020.
On that note, earlier, CMC Markets UK's chief market analyst, Michael Hewson, said: "The larger question is not only whether today’s rebound can stick, but whether policymakers can deliver, on that the jury remains out."
By the end of trading, the pan-European Stoxx 600 was 1.14% lower to 335.64, alongside a 1.51% drop for the Cac-40 to 4,636.61, while the FTSE Mibtel plummeted 3.28% to 17,870.18.
In parallel on the other hand, Brent crude oil futures rallied 9.2% to $37.84 a barrel on the ICE, even after Saudi's state-owned oil company, Aramco, pledged to boost production to a record 12.3m barrels a day in April.
To do that, reports indicated that the kingdom would even need to tap its reserves.
Yet the Stoxx 600's Oil & Gas sector sub-index only managed to add 0.81% to 206.01.
Levels of stockmarket volatility remained very elevated, with the VStoxx gauge of volatility for the Euro Stoxx 50 dipping just 0.55% to 53.80.
Overnight, the number of new confirmed virus cases in China slipped from 46 on Monday to 45, amid a much publicised visit by President Xi Jinping to the epicentre of the outbreak, in Wuhan.
In Italy meanwhile, authorities moved to a country-wide lockdown and in Spain a lockdown was announced in Madrid and the northern province of La Rioja.
Officials in Madrid also announced the suspension of flights between Spain and Italy.