Italian stocks slump 4%, as European equities crumble on spreading coronavirus

European stock markets tumbled sharply on Monday, with investors gripped by worry as coronavirus cases surged outside of China — in South Korea, Iran and Italy — over the weekend.

The FTSE MIB Italy index I945, -4.28% slid 4.3% after coronavirus cases swept through the northern Lombardy region over the weekend, which includes the financial capital, Milan. Officials put nearly a dozen towns on lockdown as the number of confirmed cases went from three on Friday to more than 150 by Monday, with three deaths. Venice reported its first two coronavirus cases, and shut its annual Carnival two days early.

Shares of Intesa Sanpaolo SpA ISP, -4.86% dropped over 4% after the lender said it would close branches across northern Italy, due to the quarantine that is affecting 50,000 people.

But the losses weren’t limited to Italy. The Stoxx Europe 600 index SXXP, -3.36% fell 3.3% to 413.79.

The German DAX 30 index DAX, -3.74% dropped 3.7% and the FTSE 100 index UKX, -3.14% lost 3%. Spain’s IBEX 35 index IBEX, -3.31% tumbled 3.2% and France’s CAC 40 index PX1, -3.56% slid 3.6%.

Futures on the Dow Jones Industrial Average YM00, -2.55% fell over 600 points. See Market Snapshot.

There were virtually no stocks in the green on Monday. Airline stocks were showing the biggest declines on Monday, with shares of easyJet PLC EZJ, -11.44% dropping nearly 10%, Ryanair Holdings PLC RY4C, -10.85% down 8%, Air France-KLM SA AF, -8.63% and Deutsche Lufthansa AG LHA, -7.28% sliding 7% each.

Apparel and footwear companies were also under pressure, with shares of Swatch Group AG UHR, -6.00% down 6% and Burberry Group PLC BRBY, -5.11% slumping 4%.

South Korea reported 161 new cases on Monday, bringing the country’s total to 763 cases, and two more deaths raising that toll to seven. Iran reported 43 cases and eight deaths. China reported 409 new cases, raising the country’s total to 77,150, along with 150 deaths.

“With further outbreaks likely to continue across the world, and Iraq and Turkey closing their borders to Iran after cases being reported there, financial markets could well have to get used to an extended period of uncertainty, as consumer behavior globally starts to change,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note to clients.

“There is already evidence that this is happening, with Chinese tourist numbers down across the world, while the French finance minister said that tourist numbers in France were already down over 30% at this weekend’s G20 finance ministers meeting,” he said.

On Saturday, the International Monetary Fund warned the virus outbreak could reduce global economic growth by 0.1% this year, and drag China’s annual growth 0.4 percentage points lower than January estimates.

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