January 28, 2020 / 8:33 AM / a month ago

UK shares recover after sell-off on coronavirus fears

(Reuters) - Britain’s benchmark stock indexes rebounded on Tuesday after shedding more than 2% in the previous session on fears over China’s coronavirus outbreak, with shares of blue-chip exporters firming as the pound slid to a one-week low.

FILE PHOTO: Traders looks at financial information on computer screens on the IG Index trading floor in London, Britain February 6, 2018. REUTERS/Simon Dawson

After suffering its worst day since early October 2019, the FTSE 100 .FTSE added 0.9%. The FTSE 250 .FTMC rebounded from its biggest one-day fall in more than a year to gain 0.6%.

An index of leisure and airline stocks .FTNMX5750 clawed back some losses from its worst day in more than three-and-a-half years to rise 1.4%. InterContinental Hotels (IHG.L) gained 3.1%.

“The fact Hong Kong has slashed border travel with China could be read as a step in the right direction in regards to containing the illness,” Spreadex analyst Connor Campbell said.

Midcap Irn-Bru maker A.G. Barr (BAG.L) soared 15.4% on its best day since October 2005 after it forecast annual profit to be at the top end of the current market view.

Crest Nicholson (CRST.L) rallied 7% to its highest since May 2018 and spurred on its peers after saying British Prime Minister Boris Johnson’s victory in the general election would support the sector in the near term.

Shares in Unilever (ULVR.L), AstraZeneca (AZN.L) and Reckitt Benckiser (RB.L) all climbed 2% as sterling dipped on concerns about Britain’s future relationship with the European Union, and ahead of a Bank of England meeting this week. [GBP/]

BUYING THE DIPS

Financial markets have been battered in recent sessions as the death toll from the virus known as “2019-nCoV” mounted, leaving China scrambling to impose a string of measures to contain its spread.

Britain’s blue-chip index has lost nearly 1% this month, while the midcaps have shed over 2%.

Markets.com analyst Neil Wilson suggested the recent slide in stock markets made for a more attractive entry point into equities for some investors.

“Buying the dips is alive and well - I would anticipate dips to be buying opportunities for many in the market,” he said.

However, Wilson remained sceptical of the market’s ability to sustain the gains due to limited visibility of the situation in China and its potential impact.

Among smaller stocks, tourism and insurance firm Saga (SAGA.L) advanced 7.6% after saying it was on track to meet its annual profit outlook, despite a one-off charge related to the collapse of Thomas Cook last year.

Reporting by Shashwat Awasthi in Bengaluru; Editing by Shounak Dasgupta and Jan Harvey

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