(Reuters) - European shares ended higher for a second straight day on Friday but pared most of the session’s gains as fears over the economic shock from the coronavirus quashed initial optimism.
The pan-European STOXX 600 index .STOXX ended up 1.8% but closed its fifth straight week in the red. Investors had initially taken some heart from emergency measures by the Bank of England on Thursday, as well as news of further sovereign bond issuance in Europe.
However, in what is likely a recurring trend, gains made on the back of regional stimulus measures failed to hold, as seen with steps by the Bank of England and the European Central Bank last week, which did little to stem the equity rout.
(Graphic: STOXX, )
“We think that it is too early to say with any degree of certainty that markets have found a bottom, to be honest. We remain of the view that markets will only stabilize when there are signs that the pandemic is being brought under control,” said Simona Gambarini, markets economist at Capital Economics in London.
“The ECB will eventually have to go further. We think that the ECB will commit to keep sovereign bond yields low for all governments at least for the duration of the coronavirus crisis.”
The outbreak showed little signs of stopping, as the death toll in Italy overtook that in China. The economic shock from the outbreak also looks primed to send the global economy into recession.
Italian stocks .FTMIB closed about 1.7% higher.
The travel and leisure sector .SXTP - the worst hit by the outbreak - led gains for the day, surging nearly 10% after touching a near 19-year low earlier in the week.
The sector underperformed its peers for the week.
Energy stocks .SXEP closed about 6% higher, coming off a 24-year low touched earlier in the week.
Among individual movers, German electrical parts maker Osram Licht AG OSRn.DE topped the STOXX 600, jumping nearly 40% after Swiss semiconductor company AMS AMS.S confirmed its public offer for the firm.
British retailer Marks & Spencer MKS.L was the latest to warn about an impact in its clothing, homewares and international businesses, sending its shares down 7%.
Reporting by Ambar Warrick and Sagarika Jaisinghani in Bengaluru; Editing by Anil D’Silva and Andrew Cawthorne
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