European stocks extended their losses on Friday as the World Health Organization (WHO) warned that the coronavirus outbreak had “pandemic potential,” with cases continuing to climb across the world.
The pan-European STOXX 600 index (^STOXX), which is set for its worst week in well over a decade, fell by more than 2.8% on Friday morning.
Global stocks are now in so-called “correction territory,” meaning that they have lost 10% since their recent all-time highs.
The WHO late on Thursday warned that no country should assume it will not be affected by coronavirus, raising the prospect of wider economic damage.
“This virus has pandemic potential,” said Tedros Adhanom Ghebreyesus, the director general of the WHO.
“We are actually in a very delicate situation in which the outbreak can go in any direction based on how we handle it.”
There have now been more than 83,700 cases of the virus worldwide, including more than 650 it Italy, 60 in the US, 25 in Spain, and 16 in the UK. Some 2,858 people have died.
As coronavirus spirals into a public health emergency in Europe, economists are now expecting a direct hit to the eurozone’s economy.
Bank of America on Thursday lowered its 2020 eurozone growth forecast from 1% to 0.6%, putting the 19-member common currency area on track for its weakest growth in six years.
Meanwhile, Bank of England governor Mark Carney warned on Friday that the UK should be prepared for coronavirus to dent the country’s economy.
Disruption to global supply chains could force a downgrade of the central bank’s growth forecasts, he said, noting that it was too early to tell the extent to which the UK will be affected.
“European shares will endure a torrid final day's trading of the month,” said Neil Wilson, the chief markets analyst of Markets.com, noting that the uncertainty of the coronavirus situation would push risk-averse traders to sell stocks before the weekend.
“Global stocks have entered correction territory and it’s now that we can start to consider the market is entering the period of peak fear. The market is crowding rapidly to price in the worst-case scenario,” he said.
The losses followed a particularly weak trading session in Asia.
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