European markets extend sell off as ECB's Lagarde speaks

LONDON, March 12 (Reuters) - A sell off in European markets gathered momentum on Thursday after comments from European Central Bank chief Christine Lagarde failed to shore up sentiment.

Earlier the ECB unveiled a series of easing measures to buffer the economy from the coronavirus outbreak but kept interest rates unchanged.

The euro was last down more than 1% on the day at $1.11740 , while European shares were down 10%.

The euro zone banking index extended its losses and was last down 9.5%.

In bond markets, Italian bonds bore the brunt of a selloff and were last up almost 60 basis points on the day at 1.77%

The gap between Germany's 10-year yield and those of lower-rated Southern European countries - effectively a gauge of credit risk on the latter - jumped, with the gap with Portugal widening to a one-year high at 135 bps.

The Italian/German 10-year bond yield gap hit almost 250 basis points, the highest since June.

A key market measure of long-term eurozone inflation expectations meanwhile fell to a fresh record low below 0.88%. (Reporting by the London Markets Team, editing by Karin Strohecker)