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FTSE 100 hits 12-month low on coronavirus fears

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
A trader studies at ETX Capital in central London. (Daniel Leal-Olivas/AFP via Getty Images)

The FTSE 100 (^FTSE) closed at a 12-month low on Tuesday, after suffering a second day of steep losses triggered by coronavirus fears.

London’s index of leading shares closed down 1.9% on Tuesday at 7,017.88. It marked a level not seen for the FTSE 100 since late January 2019.

The index has now fallen 5.1% since the start of the week, after the spread of novel coronavirus, officially known as COVID-19, in Europe triggered a sell-off. Italy is struggling to contain an outbreak in the north of the country and cases were confirmed in Austria, Switzerland, Croatia, and Spain on Tuesday.

“Markets are repricing the risks of a potential spread to neighbour countries and a more severe slowdown of the Italian economy,” analysts at Goldman Sachs wrote in a note to clients on Tuesday.

Stocks were lower across continental Europe. The DAX (^GDAXI) closed down 1.8% in Frankfurt and the CAC 40 (^FCHI) lost 1.9% in Paris.

Travel stocks were among the worst hit. In London, cruise operator Carnival (CCL.L) shed 6% and travel agent Tui (TUI.L) closed down by 4.8%.

However, losses were broad based — just three stocks on the FTSE 100 managed to close in the green. Analyst warned efforts to contain COVID-19’s spread in Europe could have a wide-ranging economic impact.

“If Europe and/or North American nations were to replicate the aggressive containment measures employed in China, it could mean materially lower economic growth in the first half of the year, and require offsetting actions from monetary and fiscal authorities to prevent a prolonged downturn,” Mark Haefele, global chief investment officer for wealth management at UBS, wrote in a note sent to clients on Tuesday.

US markets also opened lower on Tuesday. But the time European markets closed, the S&P 500 (^GSPC) was down 1.2%, the Dow Jones Industrial Average (^DJI) had lost 1.3%, and the the Nasdaq (^IXIC) was off 1.1%.