Europe close: Stocks end lower amid Covid-19 worries doubts around fiscal stimulus
European shares were knocked lower by continued worries over the rising number of novel coronavirus cases across the Continent and doubts over the chances for further fiscal stimulus in the US before the next presidential elections on 3 November.
"Sentiment has gone from bad to worse today as traders are worried about the health crisis," said David Madden, senior market analyst at CMC Markets UK.
"The number of new coronavirus cases has stoked fears about stricter restrictions, and that has impacted market confidence as economic activity could take a hit."
The pan-European Stoxx 600 index was down 0.55% to 370.96 with all other major European bourses lower by a similar amount, while the German Dax fell 0.91% to 13,018.99 and the FTSE Mibtel was down 0.81% to 19,558.69.
Adding to the downbeat sentiment, Johnson & Johnson announced overnight that it was pausing its Covid-19 vaccine trial after a participant reported an “unexplained illness”.
Regarding the chances of a US stimulus deal, Avatrade chief analyst Naeem Aslam said: "Investors are also not too hopeful for another stimulus aid package from the US this week as it is pretty clear that House members are in no mood to have any sort of resolution.
"In addition to this, Senate Republicans have also failed to warm up to the President’s stimulus proposal. Traders know that this is a bumpy road, but there were hopes that perhaps we may finally see politicians coming to their senses and finally forming a deal."
Investors were also eyeing Brexit developments with Thursday’s self-imposed UK deadline for a trade deal with the European Union.
On the economic front, official UK data showed the unemployment rate rose to a higher-than-expected 4.5% in the three months to August 31.
In company news, Airbus fell 3.5% as JPMorgan cuts its rating on the planemaker's stock to "underweight" from "neutral".
Shares in German pharma firm MorphoSYS topped the losers board, down 7% as the company announced a €325m bond offering.
Stocks exposed to the coronavirus pandemic and related restrictions felt the impact, with engine maker Rolls-Royce one of the worst performers following strong gains over the past week, closely followed by British Airways and Iberia parent IAG, Premier Inn owner Whitbread, GKN owner Melrose and InterContinental Hotels.
Cineworld, Upper Crust owner SSP, pub chain Mitchells & Butlers, cruise operator Carnival and travel company TUI also fell sharply.