Europe: Shares hit by renewed virus fears

[BENGALURU] European shares closed at a near one-week low on Monday as signs of a resurgence in coronavirus cases in Germany and elsewhere unnerved investors who were hoping for a swift economic recovery from the crisis.

After switching between gains and losses earlier in the session, the pan-European Stoxx 600 index ended 0.8 per cent lower, led by losses in the food & beverage, telecom and oil & gas sectors.

Scandal-hit German payments company Wirecard shed another 44 per cent as it said a quarter of its assets totalling 1.9 billion euros (S$3 billion) that auditor EY had been unable to account for probably did not exist.

Its stock has shed more than 70 per cent of its value over the past week.

The World Health Organization reported a record increase in global coronavirus cases on Sunday, while Germany's Covid-19 reproduction rate jumped to 2.88, a rate showing infections are rising above the level needed to contain the disease over the longer term.

"There remains a degree of concern that a rise in infection rates ... could well derail the prospects for a recovery as economies continue to try and re-open," said Michael Hewson, chief market analyst at CMC Markets.

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After a stunning recovery from March lows, the Stoxx 600 has struggled to make headway in June as investors weigh the possibility of a swift return to economic growth against rising virus cases and the chances of renewed restrictions.

All eyes will turn to Markit's flash PMI numbers for Europe, slated to be released on Tuesday. The data is expected to show further improvement in business activity in June.

Lufthansa dropped 3.2 per cent as the German government held last-ditch talks with the airline group's biggest shareholder, who is threatening to block a 9 billion euro (S$13.92 billion) bailout unless its terms are adjusted.

Telecom stocks were hit as Deutsche Telekom dropped 4.3 per cent in ex-dividend trading.

However, automakers, retailers and miners gained between 0.2 per cent and 0.7 per cent, limiting losses.

Fiat Chrysler rose 1.4 per cent after news that the Italian government was close to unveiling the approval of guarantees for a 6.3 billion euro financing.

French group Mediawan shot up 41.4 per cent as it announced the acquisition of Lagardere Studios valued at around 100 million euros as part of a broader expansion laid out by its founders.

REUTERS