• STOXX 600 on course for worst week since May 2011

LONDON: European stocks slumped 4% on Thursday, entering correction territory as a jump in coronavirus cases outside China deepened fears of a looming pandemic that could dent global growth.

Investors typically consider a correction in a security or index to be a drop of 10% or more from its recent peak.

The pan-European STOXX 600 index has fallen more than 10% over the past week, a sudden plunge from its record high on Feb. 19.

“From the unshakeable optimism seen at the beginning of the year, investors have done a complete U-turn switching from excessive optimism to outright pessimism in less than a week,” Michael Hewson, chief market analyst at CMC Markets UK, said.

In Thursday’s sell-off, more than 97% of the pan-European STOXX 600 index’s constituents were trading in the red with travel stocks bearing the brunt. British Airways-owner IAG, easyJet and Air France fell 10%-11%.

Heightening the concerns were profit warnings from blue-chip companies. Standard Chartered tumbled 4.5% after the bank said a key earnings target would take longer to meet as the epidemic adds to headwinds in China and Hong Kong.

The world’s largest beer maker, Anheuser-Busch InBev, plunged 10.4% after it forecast muted growth in 2020 due in part to the outbreak.

European stocks were poised to record their worst single-day performance since the Brexit referendum in 2016 and their sixth day of declines in the past seven.

Europe’s media index took a knock as advertising major WPP tumbled 16%, on track for its worst day since August 1992, after saying it would target flat organic growth and profit margins in 2020. Shares in rival Publicis Groupe SA fell 6.6%.

Banking stocks, miners and retail stocks all dropped about 4% to 5%. Italian shares, which entered correction territory on Wednesday, fell as the country reported another 100 coronavirus cases nationwide, taking the total to more than 400.

Governments ramped up measures to battle a looming global pandemic as the number of infections outside China, the source of the outbreak, for the first time surpassed those appearing inside the country.

Meanwhile, euro zone money markets have started to fully price in a December European Central Bank interest rate cut as expectations for more stimulus ramp up.

“People are thinking that rate cuts, now already at low levels, might stimulate the economy,” said Edward Park, deputy chief investment officer at London-based firm Brooks Macdonald. “But what we really need is supportive measures that can be executed now, and that will be in the form of fiscal policy.”—Reuters