Europe midday: Stocks reel as coronavirus spreads with analysts trying to gauge fallout
Stocks were continuing to trade sharply lower come midday as investors reacted to news from over the weekend regarding the pace at which the coronavirus was spreading in China.
According to China's National Health Commission, the sickness was contagious even during the incubation period, which was thought to last for roughly 10 days.
And as of Monday, the death toll had risen to 80 persons, with 2,744 confirmed cases and over 30,000 patients under observation.
"Stocks that are connected to China are feeling the pain this morning as traders are afraid the health crisis will curtail economic activity," explained David Madden at CMC Markets UK.
"Beijing have extended the Lunar New Year holiday in a bid to help tackle the problem."
As of 1203 GMT, the pan-European Stoxx 600 was down by 1.99% at 415.23, while the German Dax was falling 2.26% to 13,269.67 together with a 2.22% drop for the French Cac-40 to 5,890.72.
Basic Resources shares were impacted the most, due to their sensitivity to the prospect of slower growth in China on the back of travel restrictions, with the Stoxx 600 sector gauge retreating 3.75% and a gauge for the Travel&Leisure sector losing 2.68%.
Nevertheless, some analysts said weakness in Metals and Mining could prove to be a "great" buying opportunity in the longer term.
"There would likely be a negative knee-jerk reaction if the Coronavirus escalates in a similar fashion to SARS. However, as we saw in the performance data relating to SARS, the sell-offs offered great buying opportunities," Jefferies said.
Pacing losses in the latter were shares of Air France-KLM, IAG, InterContinental Hotels Group and Amadeus.
Crude oil futures also got slammed and were retreating by 2.81% to $59.03 a barrel on the ICE.
Adding to the negative sentiment, reports on Sunday indicated that at least three rockets had hit the US embassy in Baghdad, injuring at least three persons.
The main economic data out at the start of the week was mixed, with the IFO institute's closely-followed business confidence index slumping from a reading of 96.3 for December to 95.9 in January (consensus: 97.0).
Nevertheless, weakness was centred on the construction sector, while in manufacturing, IFO said there were signs of a recovery.