Last checked at 
* FTSE 100, FTSE 250 down 0.5%
* Spread of new SARS-like virus rattles markets
* UK jobs data eases BoE rate cut bets
* EasyJet outperforms main index
(Adds news items, analyst comment, updates to closing prices)
By Shashwat Awasthi
Jan 21 (Reuters) - London's FTSE 100 suffered its worst day
in two weeks on Tuesday as the spread of a new coronavirus in
China curbed risk appetite and oil prices fell sharply, while
jobs data eased some bets of an imminent interest rate cut by
the Bank of England.
China reported six deaths from the virus, which is being
likened to the deadly 2002/2003 spread of Severe Acute
Respiratory Syndrome (SARS), just ahead of the Chinese Lunar New
Year holiday.
The FTSE 100 shed 0.5%, as luxury and travel stocks
led losses. British Airways-owner IAG fell 3% and
InterContinental Hotels Group Plc slipped 3.5%. The FTSE
250 also gave up 0.5%.
Still, the indexes were off their session lows, as only a
mild drop on Wall Street suggested that fears may have been
overplayed.
"The initial sell-off was just another buying opportunity as
optimism remains that China will contain the spread," OANDA
analyst Edward Moya said.
Shares of firms that book a major chunk of their earnings in
U.S. dollars weakened as sterling gained after a robust UK jobs
report helped trim the odds of a BoE rate cut this month.
Imperial Brands Plc gave up 2.6%.
But markets have still priced in near-term policy easing,
with the central bank still widely expected to pull the trigger
on a 25-basis point cut.
"Data has turned notably softer and the BoE doesn't want to
risk allowing weakness to become entrenched ... There is a sense
the bank doesn't want to get behind the curve of market
expectations," Markets.com analyst Neil Wilson said.
"It would be following the (U.S.) Fed's playbook in cutting
early in order to prevent a downturn."
Broader sentiment and Swiss bank UBS cutting its
mid-term targets led a sub-index of financial stocks
to its lowest since mid-December.
Yet hopes that the BoE may hold rates steady helped domestic
banks Lloyds and RBS add 1% each.
Royal Dutch Shell Plc and BP also weighed as
crude prices fell on expectations that the market would be able
to manage the severe cuts to Libya's production.
However, low-cost airline easyJet outshone the
blue-chip bourse with a 4.6% rise after it forecast improvement
in its first-half winter performance.
Among midcaps, electrical products retailer Dixons Carphone
starred with a 7% gain after affirming its annual
targets, while wealth manager Quilter jumped 6.3% on a
report of a takeover.
(Reporting by Shashwat Awasthi in Bengaluru; Editing by Anil
D'Silva and Lisa Shumaker)
