European shares retreat

European shares retreated after an initial bounce on Tuesday as damage being heaped on companies and economies across the globe from the coronavirus grew and kept financial markets on edge.

Sharp restrictions on large gatherings, shutdowns of major cities and disruptions to business supply chains are taking a toll on corporate Europe. The world’s biggest catering firm Compass Group and automaker Volkswagen Group were the latest to warn of a hit from the pandemic. Compass tumbled 22.2% and Volkswagen dropped 3%.

The pan-European STOXX 600 index was down 1.1% after rising as much as 3.7% in early trading, following a dramatic sell-off on Monday that dragged it to levels last seen in 2012.

All of the 19 European subindexes were trading in red, with travel and leisure stocks plummeting 10% as drastic containment measures forced airlines to make unprecedented cuts to flights, costs and staffing.

British Airways parent, EasyJet, Ryanair and Air FranceKLM were again among the biggest decliners on the STOXX 600, bringing the wider travel sub-index’s total declines in the first quarter to over 50%.

Wall Street had recorded its worst decline on Monday since the 1987 “Black Monday” crash as the unchecked spread of the virus wiped out liquidity from financial markets and sent volatility to record highs.

A coordinated effort by global central banks to flush more cash into the system only added to the alarm around a looming global recession. Airbus tumbled 6.7% after saying it would stop production and assembly activities at its plants in France and Spain for the next four days in order to comply with the government’s containment measures.

The wider French bourse fell 1%, but was off 2013 lows hit on Monday as President Emmanuel Macron sought to reassure businesses by offering more fiscal aid.