LIVE MARKETS-Bleeding from virus: 586 out of 600 stocks in red

* European shares down sharply on China virus worries
* Miners, luxury, airlines lead sectoral fallers
* Italian banks outperform sector as regional vote brings relief
* STOXX down 2.1%, set for worst day since October

Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters and anchored today by Joice Alves. Reach her on Messenger to share your
thoughts on market moves: joice.alves.thomsonreuters.com@reuters.net

BLEEDING FROM VIRUS: 586 OUT OF 600 STOCKS IN RED (1053 GMT)
A quick healthcheck of the pan-European STOXX 600 index shows 586 stocks are in red
-- that's 98% of the companies listed on the index bleeding due to rising worries of
Coronavirus.
Airlines, hotels, cars, luxury goods, oil, industrial stocks, you name it, are all among
fallers.
Here's a snapshot of the intensity of the sell-off:


(Thyagaraju Adinarayan)
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LUXURY UPGRADES IN THE TIME OF CORNAVIRUS (1048 GMT)
China is by far the No. 1 growth market for European luxury and the space is understandably
hammered this morning on the mounting worries over the impact of the spreading Cornaviris.
Still, some brokers stay upbeat.
Take Moncler, for example. The Italian brand is among the most exposed to China
but has managed to bag in a couple of upgrades, one from Exane which lifted its rating to
outperform and the other from MS, which lifted its price target by 9%.
If that surprises you, please read on.
"While it is too early to draw any firm conclusions on the potential impact on the sector
from the virus, we note that disruptive events, especially those affecting consumer sentiment
and people travelling, have an impact on the luxury sector's valuation, but have also proven to
be historically good times to buy into the sector," Exane analysts write in a note.
To be sure, Moncler shares are down more than 3% this morning, mirroring similar losses
elsewhere in the sector. Kering, LVMH down 3.6% and Richemont are
down between 3.5 and 4%.

(Danilo Masoni)
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THERE GOES THE FTSE POST-ELECTION BUZZ (1038 GMT)
Among all the big casualties on the trading floor this morning is the post-election buzz
which turbo-charged UK equities after Boris Johnson's landslide win in December.
"Before the coronavirus situation broke out, stock markets in Europe as well as the US were
in a strong position. In mid-January the FTSE hit its highest level since the summer", wrote
David Madden at CMC Markets UK.
British blue chips are indeed back below the 7,500 benchmark, which is a real party pooper
considering a survey showed on Friday that Britain PLC is enjoying its best month in more than a
year.
Apart from retail data, other indicators such as for employment, services or manufacturing
suggest uncertainty among businesses and consumers has been tempered by Johnson's historic
victory, so much so that it could deter the Bank of England from cutting interest rates next
week.
British mid-caps, which are more sensitive to the health of the UK economy, are also
off their post-election highs but not back to where they were before Johnson's victory:
And here's a good read:
UK business perks up after election, weakening case for rate cut
(Julien Ponthus)
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LUXURY: CHINA VIRUS STINGS HARD, $50 BLN WIPED OFF (0925 GMT)
It's not surprising to see more than 95% of the STOXX 600 constituents in red this
morning as China's spreading virus outbreak is taking a toll on stocks ranging from miners to
perfume makers.
Bernstein analysts say Chinese consumers had spent $149 billion during the new year's week
last year and that's likely to take a big hit this year due to travel curbs.
The jolt is immediately felt in the top luxury names in Europe with nearly $50 billion wiped
off from their market value since the outbreak.
LVMH, Kering, L'Oreal, Burberry, Hermes,
among others, were all trading at multi-year/record highs before the virus broke out.
"Markets had been vulnerable to an eventual correction given signs of exuberance such as
strong price momentum, high valuations and overweight positioning, but a pandemic is rarely on
anyone’s list of negative catalysts...," JPM's John Normand says.
Comparing it to the 2002-03 SARs may not be the best way to weigh the impact of virus spread
as Bernstein says Chinese nationals accounted for just 2% of the global luxury goods market in
2003 versus a whopping 35% in 2019.


(Thyagaraju Adinarayan)
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POSTCARD FROM ITALY (0924 GMT)
Clouds may be darkening on markets this morning on the growing China virus scare but it
looks the sun is shining over Italy.
Milan stocks are outperforming and the FTSE MIB even managed to rise slightly at
one point. Even though further turbulence down the road is not ruled out, the outcome of local
elections over the weekend has eased worries over a snap election which, some fear, could hand
power to anti-immigrant and anti-EU right-wing leader Matteo Salvini.
Here are a few views:
UniCredit: "We expect the center-left victory in Emilia Romagna to help ease some pressure
within the ruling coalition and provide some support to government action in the coming months".
Barclays: "With the centre-left win in Emilia-Romagna, the risk of a government crisis in
the short term has receded somewhat, yet many hurdles persist: the future nature of the
coalition with a fractured M5S, the thin majority in the Senate, the regional and referendum
votes further into 2020 (among others)".
Citi: "Following the regional elections, we believe that a country risk stabilization in the
short-term is now more likely".
Italian banks, which are highly sensitive to local politics because of their big
holdings of sovereign bonds, are up 1.1%. Poste Italiane, which also has a large
government bond portfolio, is the top gainer on the STOXX.

(Danilo Masoni)
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OPENING SNAPSHOT: CHINA-EXPOSED SECTORS UNDER PRESSURE (0841 GMT)
European stock exchanges opened in negative territory with mining, airlines and luxury
companies suffering the most as China coronavirus death toll climbs to 80.
The China-sensitive mining sector is down 3.4% and travel & leisure index is
2.2% lower as investors are growing anxious about the new virus.
Despite the week-long holiday to celebrate the Chinese new year, investors are concerned
people will avoid travelling. Hotel group Accor is the worst performer of the French
index and airlines Lufthansa, Fraport, Easyjet, Air France-
KLM and Ryanair are all lower between 4 and 5.8% in the early minutes of
trading.
In the heavily Asia-exposed luxury space, Burberry, Christian Dior and
LVMH are also feeling the heat of the spreading virus outbreak.
Here is a snapshot of the European bourses:
(Joice Alves)
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ON OUR RADAR: LUXURY AND AIRLINES (0759 GMT)
Futures point to a lower start of the week for European bourses as investors are growing
anxious about the economic impact of China's spreading virus outbreak.
Traders are seeing European airlines and luxury stocks opening down 1-2%, while
China-exposed miners should come under pressure too.
There will also be some results to digest: Traders are seeing Landis+Gyr Group
down 3-3.5% after company confirmed FY 2019 guidance at lower end of all ranges.
Petra Diamonds 1H revenue fell 6%, dented by lower prices as the diamond industry
grappled with soft demand from China because of the trade war with the U.S. and the
anti-government protests in Hong Kong.
In the retail space, one trader is seeing H&M down 1% after it said on Saturday
that data security breaches found at its German unit were unacceptable and it was cooperating
with authority. [nL8N29U0FA}
Reuters reported that a Swuss regulator probes board role in Credit Suisse spying
scandal, as the spying debacle risks tipping the bank into a crisis that could engulf its top
executives.
In terms of M&A, Swiss food giant Nestle bought Allergan's medical nutrition
business Zenpep. And the founder of British subprime lender Amigo is
putting his 60.6% stake of the company on the block. Amigo is seen 5% lower this morning.

(Joice Alves)
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EUROPEAN STOCKS SEEN LOWER (0642 GMT)
Bourses in Europe are expected to open lower imitating Asian markets as investors are
growing increasingly worried about the economic impact of China's spreading virus outbreak.
Last week, investors took some relief when the World Health Organisation said the
coronavirus outbreak was an emergency in China but not yet a global one. But they are now
getting more anxious as more cases add on.
Back in Europe, investors will have a week long of political events to digest: Yesterday,
Italy's right-wing leader Matteo Salvini failed in his effort to overturn decades of leftist
rule in Emilia-Romagna, one of Italy's richest regions, home for Ferrari luxury cars.

Later this week, Britain is due to leave the EU and said it will set out more details about
its objectives for a free trade deal with the European Union after the country leaves the bloc
on Friday.
Taking all into consideration, financial spreadbetters at IG expect London's FTSE to open 75
points lower at 7,585, Frankfurt's DAX to open 164 points lower at 13,576 and Paris' CAC to open
75 points lower at 6,028.

(Joice Alves)
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(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)