European shares ended at a 14-month low on Wednesday after surrendering initial gains made on the Bank of England's stimulus measures, while weakness in markets across the Atlantic also drove losses. The benchmark STOXX 600 closed down 0.7%, having turned red after US futures pointed to losses on Wall Street, indicating that uncertainty over the coronavirus' economic impact will continue to ravage markets.
Regional stocks had rallied briefly after the BoE unexpectedly cut rates, joining a cadre of major central banks in trying to shield their respective economies from the outbreak. The bank also outlined a massive budget boost to combat the virus.
Ironically, British stocks were the worst performers for the day as weakness following a crash in oil prices continued to hound heavyweights BP PLC and Royal Dutch Shell, which closed 3.6% and 2.4% lower, respectively.
Worsening fears of the outbreak, the World Health Organization described the outbreak as a pandemic.
"I think it was very hard for the European indices to withstand the really negative US open," said Connor Campbell, analyst at financial spread better Spreadex,
Markets are now awaiting the European Central Bank's policy meeting on Thursday to see whether the bank will slash rates. However, the ECB is seen as having little room to cut, given that EU rates are firmly in negative territory.
"So far, investors have been incredibly hard to please when it comes to stimulus. Every time its been announced there's been gains, but they've come alongside a heavy dose of scepticism over what impact they will have."
Travel and leisure was the worst performing subindex, with British cinema operator Cineworld leading losses after RBC downgraded the stock on risks from the coronavirus.
Airline stocks also plummeted as travel disruptions from the virus saw investors selling en masse.
Oil and gas stocks ended lower, with markets still reeling from a crash in prices following Saudi Arabia's price war against Russia.
G4S, one of the world's largest private security firms, tumbled 22.6% to the bottom of the STOXX 600 after posting an annual statutory loss.
Bank stocks were among the few gainers after ECB President Christine Lagarde was reported as having told EU leaders in a conference call on Tuesday night that policymakers were looking at all tools ahead of the meeting, particularly ones to provide "super-cheap" funding.
German minerals firm K&S jumped 14%, topping the STOXX 600 after it said it would sell its salt business in North and South America to slash debt and focus on potash products.
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