A wave of selling hit European shares on Thursday amid investor fears of a prolonged economic downturn due to the coronavirus pandemic, driving euro zone banks to all-time lows at one point.
The pan-European STOXX 600 closed down 2.2% to hit its lowest level since April 22. After recovering sharply from mid-March lows with help from massive stimulus actions, the STOXX 600 has shed about 4% in May on worries that the early easing of lockdowns by certain countries will cause a second wave of infections.
Those fears were further heightened by the US Federal Reserve Chair Jerome Powell warning of a recession worse than any since World War Two and the World Health Organization saying that the coronavirus may never go away.
Retailers, food & beverage companies and industrials led sectoral declines in Europe. Euro STOXX 50 volatility index, also known as the stock market fear gauge, touched its highest level since May 5.
Trade-sensitive automakers dropped 2.8% as Fiat Chrysler and Peugeot decided not to pay ordinary dividends for 2019. Euro zone banks closed down 0.7% after hitting a record low earlier in the session. The index is down nearly 50% this year as surging loan losses due to the pandemic and a dividend payment freeze hit stock prices.
UK homebuilder Countryside Properties slumped 17.3% to the bottom of the STOXX 600 as the closure of its sites and sales offices battered half-year revenue and profit. Portuguese retailer Jeronimo Martins tumbled 10.9% after it withdrew its forecast for 2020 due to the uncertainty stemming from the pandemic.
In contrast, pan-European exchange operator Euronext ga1ined 2.6% after reporting a 55% jump in quarterly revenue, partly driven by heavy trading in March that has propped up profits for some brokerages.
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