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Stock markets extend brutal sell-off on coronavirus worries

By Holly Williams, PA Deputy City Editor

European stock markets have continued plunging after the worst two-day losing streak for two years overnight on Wall Street on worries over the coronavirus outbreak.

The FTSE 100 Index fell another 0.8%, taking it below 7,000 for the first time in more than a year, while the Dax in Germany and Cac 40 in France fell as much as 2%.

Losses in London mean nearly £100 billion has been wiped off the value of UK blue chips since the start of the week.

The declines across Europe come after another dire session on US markets, with the Dow Jones Industrial Average and Standard & Poor’s 500 both finishing 3% lower in the second straight day of sharp declines.

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Experts warned there was no sign of a let-up in the shares turmoil as the reality of the virus spread kicks in across equity markets.

The number of cases in China moved higher again and a raft of countries across Europe have reported their first cases due to travellers to and from hard-hit Italy spreading the virus.

Authorities in Italy reported on Tuesday night that the number of people infected in the country had grown to 322 – up by 45% in 24 hours – and deaths of patients rose to 11.

In another sign of the impact on firms and the economy, drinks giant Diageo became the latest high-profile company to warn over the financial impact of the outbreak as it knocked sales of its tipples.

The Gordon’s gin and Captain Morgan rum maker alerted over an earnings hit of up to £200 million this year from coronavirus.

It said demand has been knocked across greater China, where the outbreak started, as bars and restaurants have been closed, with sales across the rest of Asia Pacific also lower amid a fall in conferences and banquets.

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Shares in the firm fell 2% after the warning.

Russ Mould, investment director at AJ Bell, said: “The correction for equities reflects the reality that the impact of this outbreak is likely to be far-reaching and lead to pressure on companies’ revenue and earnings.”

Jasper Lawler, head of research at LCG, said investors were rushing for the exit as “nobody’s willing to ‘catch a falling knife’”.

He added: “We’ve now had two seismic daily declines on global stock markets.

“Short-term traders may well choose to grit their teeth for a short-covering rally, but we’re getting the impression institutional investors are materially reassessing their outlook for stocks.”

Travel stocks and airlines were again among those taking the brunt of the sell-off in London, with holiday firm Tui and low-cost carrier easyJet suffering a third day in a row of hefty share falls – down 4% and 3% respectively.

Energy firms and financial groups were among a small handful of FTSE 100 risers as investors looked to more defensive stocks to ride out the market falls.

Lender HSBC was 2% higher, while energy giants SSE and British Gas owner Centrica gained 1% each.