UPDATE 3-Coronavirus fear: UK markets plunge as Johnson ponders response

* FTSE down as much as 8.8%, biggest drop since 2008

* UK government says food supplies will continue

* UK coronavirus cases rises to 319, 4 dead

* EasyJet, BA set to reduce northern Italy flights
(Edits headline, adds)

By Andy Bruce and Kylie MacLellan

LONDON, March 9 (Reuters) - Coronavirus fears saw British
stocks suffer their biggest intraday fall since 2008 and
benchmark bond yields turn negative for the first time on Monday
but the government said it was not yet time to close mass events
and insisted food supplies would continue.

As the worries about the economic impact of the outbreak
battered global markets, Britain announced its fourth death from
the virus and said that it now had 319 confirmed cases, up from
273 on Sunday.

Prime Minister Boris Johnson held an emergency government
meeting to discuss when to bring in more stringent measures,
though the government said it was not yet advising the closure
of large events. Food supplies, it said, would continue.

"We are confident that food supply will continue even in our
reasonable worst case scenario," Health Minister Matt Hancock
told parliament. "We have been talking to the supermarkets for
some time about this scenario."

The new coronavirus, which emerged in China in December,
causes a disease called COVID-19. It has spread around the
world, infecting more than 110,000 people and 3,800 people have
died worldwide, according to a Reuters tally.

The FTSE 100 plunged to a three-year low after Saudi
Arabia crashed the oil prices by slashing its own selling prices
and raising output.

Yields on benchmark British government bonds turned negative
for the first time ever as panicked investors rushed to the
safety of gilts to hedge against the feared economic shock of
the coronavirus.

The 2-year gilt yield last stood at -0.032%, down
12.6 basis points on the day. The commodity-heavy FTSE 100 gave
up as much as 8.8%, while the domestically focused mid-cap index
shed 6.1%.

GOVERNMENT RESPONSE

Britain's emergency scientific group agreed last week that
the virus was likely to spread in a significant way.

As some British supermarket shelves were emptied of basics
such as lavatory paper, the British government said it had set
up a team to tackle "interference and disinformation" around the
spread of coronavirus.

The country's biggest retailer, Tesco, has restricted bulk
buying of products such as anti-bacterial gels and wipes, dried
pasta and long-life milk.

Britain's finance minister is due to deliver his annual
budget speech on Wednesday and investors awaiting any indication
of additional stimulus from the Bank of England and the
government.

UK-based airlines easyJet and British Airways
are expected to reduce their flights to northern Italy
over the next three and a half weeks after Italian authorities
ordered a virtual lockdown of the area.
(Additional reporting by Elizabeth Piper, William James, Sarah
Young and Michael Holden; Writing by Guy Faulconbridge; editing
by Michael Holden/Keith Weir)