Europe Markets: Italian stocks set to lead sharp decline for European equities as coronavirus spreads

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European stock markets were poised for a sharply lower open on Monday, with investors gripped by worry as coronavirus cases surged outside of China — in South Korea, Iran and Italy — over the weekend.

Futures for the FTSEMIB Italy index I945, -1.22%  indicated a 3.7% drop at the start of trading for the index as coronavirus cases swept through the northern Lombardy region over the weekend, which includes the financial capital, Milan. Officials put nearly a dozen towns on lockdown as the number of confirmed cases went from three on Friday to more than 150 by Monday, with three deaths.

Intesa Sanpaolo SpA ISP, +0.00%  said it would close branches across northern Italy, due to the quarantine that is affecting 50,000 people.

German DAX 30 index futures DAX, -0.62%  pointed to a 2% drop and those for the FTSE 100 index UKX, -0.44%  were down about 1.7%. Spain’s IBEX 35 index IBEX, -0.45%  was set to lose 2.4% at the start, according to futures prices. European stocks finished lower last week amid concerns about the virus’s spread beyond China’s borders, with the Stoxx Europe 600 index SXXP, -0.49%   dropping 0.5% on Friday to 428.07, and down 0.6% for the week.

South Korea reported 161 new cases on Monday, bringing the country’s total to 763 cases, and two more deaths raising that toll to seven. Iran reported 43 cases and eight deaths. China reported 409 new cases, raising the country’s total to 77,150, along with 150 deaths.

“With further outbreaks likely to continue across the world, and Iraq and Turkey closing their borders to Iran after cases being reported there, financial markets could well have to get used to an extended period of uncertainty, as consumer behavior globally starts to change,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note to clients.

“There is already evidence that this is happening, with Chinese tourist numbers down across the world, while the French finance minister said that tourist numbers in France were already down over 30% at this weekend’s G20 finance ministers meeting,” he said.

On Saturday, the International Monetary Fund warned the virus outbreak could reduce global economic growth by 0.1% this year, and drag China’s annual growth 0.4 percentage points lower than January estimates.

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