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UPDATE 2-European shares back in red as virus fears persist; Miners lead losses

Published 06/03/2020, 04:32 am
Updated 06/03/2020, 04:35 am
© Reuters.  UPDATE 2-European shares back in red as virus fears persist; Miners lead losses
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* Resource stocks hit by ex-div trading

* More companies warn of pain from coronavirus

* 10 bps cut by ECB does little to economy - analyst

* HSBC down after coronavirus case in London (Updates to close)

By Ambar Warrick and Sruthi Shankar

March 5 (Reuters) - European shares snapped a three-day gaining streak on Thursday as concerns over the scale of economic damage caused by the coronavirus outbreak overtook optimism over support from monetary stimulus.

Resources .SXPP was the worst performing sector as several heavyweight miners, including BHP Group BHPB.L and Rio Tinto RIO.L , traded ex-dividend. The two stocks lost about 6% and 7% for the day, respectively.

The main European equity benchmark .STOXX ended 1.4% lower after the death toll from the outbreak rose to more than 3,300, with several more companies providing profit warnings because of disruptions caused by the coronavirus.

Hopes of stimulus from several major central banks to stymie the impact of the outbreak had stabilised the index this week, but questions had remained about whether central banks would be able to completely shelter big economies.

Analysts firmly expect the European Central Bank to cut interest rates by 10 basis points next week.

"At 10 basis points, an interest rate cut hardly does anything to the economy. It's more of a signal to the market that the ECB is ready to act and also, it will likely be accompanied by a message that they're looking into more targeted measures," said Elwin de Groot, head of Macro Strategy at Rabobank in Amsterdam.

Travel and leisure stocks .SXTP dropped 2.9%, with the sector ranking among the worst hit by the virus.

Airline stocks plunged after British regional airline Flybe collapsed, making the struggling carrier the industry's first big casualty of the outbreak. commercial broadcaster ITV ITV.L fell 12% after warning that ad revenue for April could fall by about 10% as travel companies put back campaigns. auto supplier Continental CONG.DE slumped 12.4% after it posted a net loss of 1.2 billion euros ($1.34 billion) in 2019, with the broader automakers index .SXAP dropping 3.4% in tow. bank HSBC HSBA.L dropped 1.2% after it sent more than 100 of its London staff home after a worker tested positive for the coronavirus. bank stocks .SX7P retreated in the face of steadily dropping bond yields GVD/EUR

Ratings agency Fitch said on Thursday the spread of the coronavirus in the EU opens new channels for it to affect the regional economy and heightens its adverse impact on GDP growth. Elwin said the EU would probably have two quarters of zero-to-negative growth, with some countries showing negative growth in 2020.

Among stocks in the black was German food delivery firm Hellofresh HFGG.DE , which was one of the top gainers on the STOXX 600 after JP Morgan upgraded the stock.

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