London stocks drop again on coronavirus worries

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Shares traded on the London Stock Exchange fell again on Tuesday as investors continued to worry about the spread of the coronavirus.

The sell-off sent the FTSE 100 down almost 2% to a 12-month low of 7,018 by the close of the day.

It followed a dismal day for Japan’s Nikkei 225 index, which fell 3.3% before closing earlier.

In the US, all three of the major indexes were trading more than 1% lower in early business.

The slump followed a global stock market plunge on Monday, which saw significant drops in the US and Europe.

But shares across Asia’s other major stock markets traded cautiously on Tuesday.

Hong Kong’s Hang Seng index edged up slightly, while South Korea’s Kospi rose 1.2%.

Shares in Toyota Motor Corp fell 3.7%, while Uniqlo’s parent company Fast Retailing dropped 4.2%.

Both firms are highly dependent on a global supply chain that faces disruption following the shutdown of Chinese factories.

In the UK, travel companies were once again among the biggest losers with 6% being wiped from the value of cruise company Carnival and Tui shares shedding almost 5%.

It followed an increase in the number of cases of coronavirus outside China.

At least 280 people have been diagnosed with the virus in Italy, where seven have died. A handful of cases have also been identified in Switzerland, Austria, France and Germany

Many analysts expect the spread of the coronavirus to peak in the first quarter of this year, with economic activity rebounding in the second quarter.

“Those who expect the virus to kick off a global recession might be disappointed, as the impact is likely to be temporary,” said Margaret Yang, an analyst with CMC Markets. “Central banks around the globe are ready to inject liquidity and cut down interest rates to cushion the headwind.”

She added that the coronavirus is proving to be less deadly than Sars, just more contagious.

In China, the Shanghai Composite index closed down 0.6% amid mixed reports about efforts to contain the virus.