European shares fall as virus spreads

European stocks fell on Friday, halting their biggest ever threeday rally in a sign investors were focusing once more on the spread of the coronavirus pandemic despite hopes for further stimulus measures to combat its economic impact.

The pan-European STOXX 600 index was down almost 2% in early deals. The benchmark index has recovered almost 17% since hitting its lowest since 2013 on March 16, but remains more than 26% below last month’s all-time high in a rout that has erased more than $3 trillion from the value of European firms.

Stock markets have rallied over the past week on the back of trillions of dollars of enacted and pledged economic stimulus by policymakers worldwide, from central banks to governments. In Europe, where the pandemic is still far from contained, policymakers have suspended state aid rules and limits on public borrowing and approved $40 billion in emergency funds to help airlines, among the hardest hit in the global emergency. The losses came after stock markets rallied in Asia and Wall Street overnight.

The United States is now the country with the most coronavirus cases, surpassing even China, where the flu-like illness first emerged late last year. Policymakers may need to offer more stimulus as the virus slams the brakes on economic activity and increases healthcare spending.

The U.S. House of Representatives is expected to pass a $2.2 trillion stimulus package that will flood the world’s largest economy with money to stem the damage caused by the pandemic. The U.S. Federal Reserve has already slashed rates to zero and launched quantitative easing. The Fed will also take the unprecedented step of offering a direct backstop for corporate loans.

U.S. crude ticked up 0.66% to $22.74 a barrel, but Brent crude fell 1.29% to $26. Energy markets have been caught in a tugof-war between falling fuel demand, hopes for stimulus spending and worries about excess oil supplies.