LIVE MARKETS-Closing snapshot: Another sell-off after Black Monday

* European shares end sharply lower * Sentiment fragile on worries of global virus pandemic * STOXX 600 hits lowest since Dec. 11 * Wall Street turns negative Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@tr.com), Joice Alves (joice.alves@tr.com), Julien Ponthus (julien.ponthus@tr.com) in London and Danilo Masoni (danilo.masoni@tr.com) in Milan. CLOSING SNAPSHOT: ANOTHER SELL-OFF AFTER BLACK MONDAY (1702 GMT) Investors continued to dump risky assets today as worries over a global spread of coronavirus and the possible economic damage grew yet again. After a Black Monday that wiped nearly $474 billion off the value of European stock markets, shares in the region suffered more heavy losses. The STOXX 600 plunged to its lowest since December 11, ending down 1.8% and after losing 3.8% in the previous session. Here's your closing snapshot: (Danilo Masoni) ***** ***** CORONAVIRUS: WHO'S NEXT? (1516 GMT) It's all a bit fragile here, but just imagine the chaos if a large city in the U.S. is quarantined (hope that never happens) -- that's when the alarm goes off and panic breaks through the roof spooking markets. "We increasingly find it hard to believe that USA cases are as low as reported, and believe that given the flow of Chinese, Korean and Iranian nationals into North America, a large USA community-based outbreak is increasingly likely," Jefferies equity strategists say. (see chart below) Italy's rise to the infamous third place has already put a lot of pressure on markets knocking trillions of dollars off, it could get far worse when there are rising cases in the States. Jefferies: "Significant breakouts in Italy, Iran, and S.Korea might suggest that COVID-19 breakouts are now possible in many other locations." Jefferies' Simon Powell highlights that there is almost no testing being done in the U.S. now compared to South Korea or Italy or UK. (see chart below) (Thyagaraju Adinarayan) ***** AIRLINES: VIRUS HEADWINDS, FUEL TAILWINDS (1502 GMT) Airlines are struggling to recover after Monday's savage sell-off and while virus concerns are no doubt going to create some damage, falling fuel costs need to be added to the equation to get a better picture of the sector's earnings outlook. Analysts at Credit Suisse did some number crunching. "Revenue risk needs to be considered alongside fuel bill tailwinds which provide at least a partial hedge for the airline sector," they say. With a mark-to-market exercise of fuel costs CS calculates possible benefits as follows: * Air France: 300 mln euros tailwind in 2020 (1% of revenue) * Easyjet: 60 mln pounds (1%) * IAG: 300 mln euros (1%) * Lufthansa: 500 mln euros (2%) * Ryanair: 50 mln euro for FY21E (0.5%) And here are a few numbers on the coronavirus risk in Italy. * Ryanair: 19% of seats depart Italy * Easyjet: 12% * European carriers: capacity exposure much lower at 1-3% Here's more reading: Airlines plunge as Italian coronavirus outbreak threatens longer crisis (Danilo Masoni) ***** BONDS, A RISKY SAFE HAVEN...(1317 GMT) Prior to Monday's rout, it seemed bonds and equities were taking an opposite view on the coronavirus outbreak: stocks were hitting daily record highs no matter what while bond yields were telling a different, more cautious story. Yesterday's move seemed unequivocal with both asset classes frantically scrambling to price growing fears of a global pandemic. But with the dust settling today, there's still probably a case to argue that bonds are taking the coronavirus threat a tad more seriously than stocks. Hence, buying the traditional safe haven rather than shares may turn out be a tricky bet in the end. "From our perspective, bonds seem more at risk than equities at this point", Unigestion argued in a note. "We see the bond rally as driven more by fear than a change in underlying fundamentals and it is therefore prone to a sharp reversal if these fears dissipate", the asset manager's analysts write. While "bond investors are giving a clear signal that the virus will have a meaningful, non-transient negative impact on growth", volatility is still lower than it was during previous peaks of tensions during the past two years. "The view from the equity market seems clear: COVID-19 is a risk but should not derail the supportive context for corporate earnings and stock prices". Here's Europe's fear index still way below its peaks of the last five years: And here's the bund yield, clearly trading at levels last seen at the height of recession fears in Q3 last year: (Julien Ponthus) ***** "CRASH LIKE NEVER BEFORE" (1224 GMT) No, we're not talking about yesterday's crash or today's follow-up. That's a comment from the U.S. President Donald Trump who is currently visiting India: "The markets will jump thousand and thousand of points if I win (the U.S. election), but if don't win, it will crash like never seen before." We guess he meant 1000s and 1000s of points on the Dow Jones index (now at c 28,000 points) and not on the S&P 500 (now at 3,225 points). Talking about crashes and point gains, we're back neck deep in red again and oh boy, did the recovery signs from this morning quickly disappear in thin air. Goldman Sachs says markets are repricing the risks of a potential spread to neighbour countries and a more severe slowdown of the Italian economy. Meanwhile, Trump also reportedly said markets had just "one bad day" yesterday. Here's some stats to sum-up what a bad day feels like: ** World stocks slumped 3% in their worst single-day performance since 2016 ** MSCI all-country world index has fallen 3% or more only 10 other times in the past decade ** The $1.5 trillion value wipe-off is the second-biggest daily loss ever ** The panic was enough to move the needle on Fed rate cut expectations: about two quarter point interest rate cuts are now priced into futures markets by year end, with a 50-50 chance of a first ease as early as April. (Thyagaraju Adinarayan) ***** IS GOLD TOTALLY SAFE? (1156 GMT) The virus pandemic scare is beating down risky assets and understandably investors are rushing to diversify their portfolios. Gold is safe haven par excellence and even now that it's at 7-year highs, a further run cannot be ruled out. UBS expects the gold market to be well supported in the first half, given the uncertainty surrounding the virus outbreak and the precious metal's own appeal as "diversifier". But investors should be mindful too. Analysts at the Swiss bank say FOMO (fear-of-missing-out) has had a role in the rally and warn that gold is now a very crowded space, which means prices could overshoot. "The impact of positioning on short-term price trends cannot be ignored either," they say. This UBS chart shows gold positioning is at record highs. (Danilo Masoni) ***** CORONAVIRUS SELL-OFF: BLAME HUMANS, NOT ALGOS (1108 GMT) "We think it is unlikely that algorithmic investors (trend-following algos such as CTAs and risk-parity funds) are the main culprits behind the selloff", a Nomura research note argues this morning. "The main trigger seems to have been human decisions and nontechnical factors", the note finds, adding that the algos may however have exacerbated the downward trend by responding to the market move. In a nutshell, some humans seem more prone than robots to believe that the recent spread of the coronavirus to Italy, South Korea and Iran could be a tipping point or a game changer that takes us from "a momentary depressive effect on the economy" to a "global economic collapse". "We get the impression that a wide range of investors are now factoring in a previously unthinkable scenario", Nomura writes, pointing out that its "gauge of global equity sentiment shows an unusual deterioration pattern". In the absence of bullish hedge funds willing to buy the dip, "we see a risk that this bearish contagion could infect the entire hedge fund population", it added. (Julien Ponthus) ***** PUFF! BACK IN THE RED (0932 GMT) Sentiment is so fragile that it took nothing to bring European markets back in the red as fears of a global coronavirus pandemic look unlikely to go away anytime soon. Early gains have rapidly evaporated and the STOXX 600 is now down 0.3%, as you see in this chart, in a broad based sell-off with most sectors in the red. (Danilo Masoni) ***** OPENING SNAPSHOT: STEADY (0827 GMT) Not bad, markets are still clinging on to gains and sectors that got hammered yesterday are bouncing back, but only slightly. For instance, the STOXX 600 travel & leisure index is up just 0.8% versus the 6% drop yesterday. Among single stocks, Meggitt's shares are down 4.6% after the British engineering company's warning on impact from Boeing's 737 MAX production halt and the disruption caused by coronavirus. After being hit hard initially on weak dividend, Hammerson shares have turned positive. A London-based trader says most of the negatives are already priced in. Not many big fallers, but on a sector level, autos and banks are the underperformers. (Thyagaraju Adinarayan) ***** ON OUR RADAR: AIRLINES BOUNCE BACK, MEGGITT, PRUDENTIAL (0758 GMT) Futures indicate 0.6% to 0.8% gain for European bourses at open as stocks attempt to bounce back from the massive drop on Monday that took the pan-European STOXX 600 into negative territory for 2020 and wiped almost half-a-trillion dollars. Airlines are seen rising 2% after a brutal sell-off last session, especially in low-cost carriers such as Ryanair and easyJet. While coronavirus fears are keeping investors away from risky assets, bankers are curbing trips to Italy after the outbreak over the weekend. Citi, Nomura and Credit Suisse among first to ask staffs to postpone their trips, sources tell us. In corporate news, it's mostly headlines from UK companies. Meggitt shares in focus after the British engineering company warned that Boeing's 737 MAX aircraft production halt and the disruption caused by coronavirus is likely to dent 2020 growth. Tesco sells its 20% stake in a China JV for 275 million pounds, marking the British retailer's exit from the country. Banknote printer De La Rue, which flagged going concern doubts in November, unveiled cost-cutting plans and reaffirmed its profit outlook. Prudential shares are seen rising 3% after activist investor Third Point amassed stake and called the British insurer to split into two companies. British cybersecurity company Avast is seen falling 3% after its U.S. peer Palo Alto Networks forecast lower revenues for 2020. A couple of interesting moves outside the UK: Novartis is seen opening lower after reports of negative side effects from its new eye drug Beovu; Leoni under pressure premarket after full-year revenues miss estimates. Headlines to digest: Judge delays Arkema criminal trial, citing withheld evidence Renault says reserves the right to seek damages depending on Ghosn probe Citi, Credit Suisse among banks curbing Italy trips on coronavirus fears Group of UBI investors says Intesa Sanpaolo's offer undervalues stock (Thyagaraju Adinarayan) ***** TENTATIVE GAINS AFTER YESTERDAY'S ROUT (0652 GMT) European stocks point to a small bounce back after yesterday's rout that wiped roughly half-a-trillion dollars off the pan European STOXX 600 index as the deadly coronavirus spread beyond China. The damage to global stock markets stood at a whopping $1.5 trillion -— one of the biggest one-day market value losses ever. "Losing all 2020's gains in one session was a dramatic way to do it but yesterday's resetting of equity valuations was overdue. They now more accurately reflect the downside threat to corporate earnings from the coronavirus," says Ian Williams, economics & strategy research analyst at Peel Hunt. (Thyagaraju Adinarayan) ***** (Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)