European shares notch record high as investors shake off virus fears

[February 19, 2020]  By Sagarika Jaisinghani

(Reuters) - European shares notched a fresh record high on Wednesday, supported by a weaker euro, while a decline in the number of new coronavirus cases raised hopes that the impact of the epidemic on the global supply chain would be short-lived.

The pan-European STOXX 600 index <.STOXX> added half a percent, after data showed the number of new virus cases in China fell for a second straight day, lending weight to forecasts that the epidemic might ebb by April.

China-exposed miners <.SXPP> rose more than 1%, recovering quickly from a near-2% slump on Tuesday, when a sales warning by Apple Inc <AAPL.O> had raised worries about the fallout of the deadly outbreak on industries most reliant on China for supply.

"The view in the markets is that the Chinese authorities are always going to try and intervene somehow in financial markets," said David Madden, markets analyst at CMC Markets in London. "So it sort of becomes the case of 'bad news is good news'."

The Chinese central bank has taken several measures to help the world's second-biggest economy weather its biggest health crisis since the SARS epidemic in 2002-03, lifting global sentiment and putting world stocks on course for their best month since June 2019.

Gains in the technology sector nudged Milan shares <.FTMIB> to their highest level since 2008, with Apple supplier STMicroelectronics NV <STM.MI> the top gainer on the bourse.

The index had closed at its highest in over a decade on Tuesday, propelled by hopes of much-awaited consolidation among Italian banks.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, February 18, 2020. REUTERS/Staff/File Photo

Frankfurt's main index <.GDAXI> rose about 0.4%, a day after data showed a sharp deterioration in German investor sentiment and sent the euro <EUR=> crashing through a closely watched support level at $1.08.

All eyes will now be on a raft of economic data from the euro zone later in the week, including a flash reading of the Purchasing Managers' Index (PMI) for France and Germany.

In corporate news, Renault <RENA.PA> fell 1.6% after credit rating agency Moody's cut its rating on the French carmaker's debt to "junk" status.

Telecommunications equipment company Adva Optical Networking <ADAG.DE> slumped 13% to a three-month low after flagging disruptions from the coronavirus outbreak.

On the other hand, German container shipping company Hapag-Lloyd <HLAG.DE> jumped 5% after raising its 2019 profit forecast on higher freight rates.

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Shounak Dasgupta and Saumyadeb Chakrabarty)

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