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Markets bounce back despite rising coronavirus death toll

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
Medical staff transfer a patient of a highly suspected case of a new coronavirus at the Queen Elizabeth Hospital in Hong Kong
Medical staff transfer a patient of a highly suspected case of a new coronavirus at the Queen Elizabeth Hospital in Hong Kong, China, on 22 January. Photo: CNS via Reuters

European stock markets rebounded on Friday, despite rising concerns about the global spread of the deadly coronavirus.

The FTSE 100 (^FTSE) rose 1% in early trade, the CAC 40 (^FCHI) in Paris climbed 0.9%, and the German DAX (^GDAXI) bounced 1%.

Stocks had sold off sharply around the world on Thursday, after China put two cities on lockdown in response to the rapid spread of pneumonia-like coronavirus.

China widened its lockdown to cover 10 cities, the BBC reported Friday, as the death toll rose to 26 people. In the UK, 14 people are being tested for possible cases.

Share prices bounced back across Europe on Friday morning despite ongoing concerns. The recovery was broad-based, with just three companies on the FTSE 100 seeing share price losses after around 45 minutes of trade.

“Markets have been cautious over the last 24 hours as concerns over the coronavirus grew,” Deutsche Bank strategists Jim Reid, Craig Nicol, and Henry Allen wrote in a note to clients on Friday.

However we’re notably off the lows from yesterday perhaps due to news from the World Health Organization yesterday that they were not yet declaring a PHEIC (public health emergency of international concern).”

Overnight, Chinese stock markets closed lower on continued concerns about coronavirus. The Shanghai Composite (000001.SS) dropped 2.7% and Hang Seng (^HSI) in Hong Kong closed down 1.1%.

Naeem Aslam, chief market analyst at Avatrade, said credit rating agency S&P Global has warned that the continued spread of coronavirus could knock as much as 1.2 percentage points off Chinese GDP growth.

The Nikkei (^N225) in Japan managed modest gains, closing up 0.1%.

Safe-haven asset Gold (GC=F) had risen sharply on Thursday but sold off slightly on Friday. Futures for the precious metal were down 0.4% to $1,559.00.