Virus fears hit global stock prices sending markets into dramatic slide

The FTSE 100 share index in London closed 100 points down, at its lowest level in four and a half months on Tuesday, slumping 1.94 percent to 7,017.88, with the wider FTSE 250 down 1.9 percent at 20,715.97 as the impact of the novel coronavirus outbreak on the global financial markets persisted for a second day.

On Monday, the FTSE suffered its biggest losses in four years, with 62 billion pounds ($80 billion) being wiped off share prices, and the Dow Jones and Nasdaq in the United States also fell by more than 3 percent. Despite a slight recovery early on Tuesday morning, as the day wore on, doubts and caution set in once again.

"The colossal losses that were racked up (on Monday) encouraged some bargain hunting at the start of today's session, but that old concerns crept in, hence why we are off side again," David Madden of CMC Markets told the Daily Telegraph.

"The coronavirus fears have gripped European stocks as dealers are worried that this part of the world could go down the Wuhan route in terms of being on lockdown.

"Yesterday, Europe-focused airlines like easyJet and Ryanair posted painful losses, and they are in the red again today, and that tells you everything you need to know about tourism sentiment."

Reported cases of the virus in popular holiday destinations across Europe meant it was the travel sector that felt the pinch particularly hard.

Having been Monday's biggest loser, with a 17 percent decline in value, easyJet lost an additional 3.5 percent on Tuesday, travel operator TUI ended the day almost 5 percent down, and the biggest casualty of the day was cruise company Carnival, which lost nearly 6 percent in value.

Naeem Aslam, chief market analyst at Avatrade, told Sky News that Tuesday for many was a day that was all about playing it safe financially.

"Risk off is the name of the trade today," he said.

"Investors are tensed due to the fear of a prolonged economic slowdown due to the outbreak of coronavirus."

Speaking about Monday's slump, he added: "In reality, it was nothing more than the market participants overreacting to news of the virus spreading.

"This slowdown was indeed expected, and if investors thought that the virus wasn't going to spread or wasn't going to cause some minor shocks to the global economic growth, then yesterday certainly was an awakening call for them."