New virus wave, Volvo warning drag European stocks lower

(Reuters) – European stocks eased from a one-year peak on Tuesday, as a new wave of coronavirus infection and fresh lockdown in Germany raised fears of a slow economic recovery from the pandemic shock.

The pan-European STOXX 600 index fell 0.4% after a new round of sanctions aimed at China hit Asian markets.

The German DAX dropped 0.4% after Chancellor Angela Merkel on Tuesday decided to extend lockdown until April 18 and called on citizens to stay at home for five days over the Easter holidays.

Swedish truckmaker Volvo slumped 6.4% after it warned that a shortage of semiconductors would have a substantial impact on production in the second quarter.

Its stock weighed on Europe’s industrial goods and services sector , while automakers slid 1.8% to give back some of their recent gains.

“The market is taking the view that recovery is going to be delayed because things are not getting better for the time being,” said Emmanuel Cau, head of European equity strategy at Barclays.

“But as long as the vaccine efficacy is not being put into question, we think investors will look through short-term volatility.”

The STOXX 600 last week climbed to their highest level since February, recouping most of the pandemic-driven losses on hopes that vaccination drives and stimulus measures will spur a strong economic rebound.

The gains have slowed this week amid worries about a surge in COVID-19 cases. The tally of new cases in France accelerated despite the start of a third lockdown, while Austria postponed the reopening of cafe and restaurants.

Travel & leisure stocks fell again, with British Airways-owner IAG, easyJet and travel company TUI down more than 4%.

British Health minister Matt Hancock said fines of 5,000 pounds ($6,900) will be introduced for people from England who try to travel abroad before the end of June.

Swiss drugmaker Roche fell 1.2% after it dropped a late-stage trial of its Huntington’s disease hopeful, tominersen.

Swiss online pharmacy chain Zur Rose surged to the top of STOXX 600 after Morgan Stanley started coverage with an “overweight” rating.

Shares in online reviews platform Trustpilot jumped 14% in their London stock market debut. The company priced the IPO at 265 pence per share, giving it a market capitalisation of 1.08 billion pounds ($1.49 billion).

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