Europe: Weak earnings hit stocks amid virus fears; FTSE slides as BoE stands pat

[BENGALURU] European shares fell on Thursday on worries over the economic fallout from a virus epidemic in China and some poor earnings updates, while London stocks hit session lows as the Bank of England held off cutting interest rates.

A day ahead of Britain's exit from the European Union, the BoE left rates unchanged in Governor Mark Carney's final policy meeting, saying it saw signs of a post-election pick-up in growth. Market participants had been almost evenly split on what the BoE's would do.

"We continue to expect the BoE to remain dovish - but on hold - in the near-term, before turning more hawkish in mid-2020 as economic activity and inflation rebounds," said Kallum Pickering, a senior economist at Berenberg.

The pound rallied, while London's blue chip index extended losses to close down 1.4 per cent and mid-caps lost 0.8 per cent.

The pan-European Stoxx 600 ended 1 per cent lower to take losses so far this week to 2 per cent - its worst weekly performance in nearly four months.

Global equities and some commodities markets have experienced a sharp sell-off this week as the number of reported cases of people infected with the flu-like coronavirus jumped. It has so far claimed 170 lives in China and spread to more than 16 countries, disrupting global travel and company operations.

London-listed shares of Royal Dutch Shell were the biggest drag on the benchmark index, shedding 4.4 per cent after the company's quarterly profit halved. The wider energy subsector fell 2.6 per cent, also pressured by lower oil prices.

Shares of watchmaker Swatch Group slipped 3.9 per cent as it reported a marked drop in annual sales and forecast continuing challenges in its key Hong Kong market this year.

Other luxury brands - LVMH, Hermes, Gucci owner Kering, Moncler, Burberry - also slipped between 0.4 per cent and 2.1 per cent.

British cybersecurity company Avast was the worst performer on the pan-regional index after it announced the closure of the scandal-hit Jumpshot analytics business, which will see it take a charge of US$15 million-US$25 million in 2020 in wind-down costs.

Fashion retailer H&M, consumer goods giant Unilever and truck maker Volvo were the biggest boosts to the Stoxx 600 after reporting upbeat results.

As the global growth outlook worsens, Germany's inflation came in below the European Central Bank's target for a ninth month in a row, strengthening the case for the bank's easing bias. Germany's DAX slipped 1.5 per cent.

REUTERS