Shares down on Fed outlook and worries of new virus cases

European shares moved further away from their threemonth peak on Thursday after a downbeat economic outlook from the U.S. Federal Reserve and on worries of a second wave of COVID-19 cases.

The pan-European STOXX 600 fell 2.5%, its fourth straight day of decline, with travel and leisure stocks sliding 4.3% on fears of a further hit to demand. TUI, Carnival Corp and British Airwaysowner IAG were the top decliners on the STOXX 600. Banks, automakers and oil and gas companies shed between 3.8% and 4.6% in reaction to the dour economic outlook. A strong rally in risk assets halted this week, with stocks taking a fresh leg lower after the Fed on Wednesday warned of a long road to recovery.

The central bank expects the U.S. economy to shrink 6.5% in 2020 and the unemployment rate to be 9.3% at the year’s end.

Lufthansa slumped 8.8% after it admitted that positions of up to 26,000 employees are surplus to requirements, suggesting many more jobs will be cut at the German carrier. Fiat Chrysler fell 5.6% and Peugeot maker PSA 6.6% after a report that the carmakers will face a lengthy EU antitrust probe over their planned $50 billion merger.

Asian shares retreated as a gloomy outlook from the U.S. Federal Reserve challenged market optimism on the global economy, while bonds rallied on speculation that yet more stimulus would be needed to ensure recovery. After a slow start, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 1.4%, likely putting an end to a 10- session winning streak. Japan’s Nikkei slid 2.1% in its largest daily loss in five weeks, while Chinese blue chips eased 1.0%.

Oil prices turned lower amid renewed concerns about demand and after U. S. data showed crude inventories had risen to record highs. Brent crude futures fell $ 1.27 to $40.46 a barrel, while U. S. crude lost $1.41 to $38.18.