February 27, 2020 / 5:26 PM / a month ago

UPDATE 2-UK shares briefly slip into correction as coronavirus wreaks havoc

* FTSE 100 down 3.5%, FTSE 250 slides 4.1%

* Both indexes briefly in correction

* StanChart slips after warning on virus hit

* WPP slides as Q4 disappoints

* Hikma outshines on bright forecast (Writes through)

By Sagarika Jaisinghani, Devik Jain and Shashwat Awasthi

Feb 27 (Reuters) - London stocks plummeted on Thursday, with both benchmark indexes briefly confirming a correction, as a sharp rise in the number of coronavirus cases outside China raised fears of a global pandemic and crippled risk appetite.

The FTSE 100 tumbled 3.5% to its lowest since January 2019, with heavyweight banks, miners and oil stocks dragging the most. At its lowest in the session, the index was more than 10% below its peak from just a week ago.

The domestically focussed mid-cap index tanked 4.1%, its biggest one-day drop since June 2016 and a fifth straight day in the red. It also traded more than 10% lower from its recent peak on Feb. 20 during the session.

Britain’s hardline stance on trade talks with the European Union heaped pressure on domestic equities already battered by concerns over the virus.

“The sharp declines in equity markets in the last week have turned investor sentiment on its head in a fashion that is almost schizophrenic in nature,” CMC Markets analyst Michael Hewson said.

Investors grew increasingly worried about the impact of the virus outbreak on global supply chains, and Standard Chartered joined the likes of Apple and Microsoft in warning of a hit from the epidemic.

The Asia-focussed bank fell 3.6% after saying that a key earnings target would take longer to meet as the epidemic added to headwinds in China and Hong Kong.

Rival HSBC slipped 4.6% as the stock also traded ex-dividend.

Sectors most exposed to China for revenue were battered, with autos and miners losing 4.2% and 4.8%, respectively.

Both the FTSE 100 and the FTSE 250 are currently on course for their biggest weekly drop since August 2011. European markets and Wall Street also slid into correction territory.

“This is one of the worst weeks in recent memory - and terrifyingly, it’s not over yet,” Spreadex analyst Connor Campbell remarked.

He also speculated on future near-term moves in equities, pondering over whether the recent trend of buying the dips would entice dealers or if stocks would be stuck in a rut after Thursday’s carnage.

“One way or the other, it’s hard to see any tangible good news appearing to generate a sustainable rebound,” he said.

Economic data for January had been fairly upbeat, but analysts have since sharply cut their forecasts for economic growth in China and the world, with BofA the most recent to sound an alarm.

News-driven moves saw ad firm WPP skid almost 16%, its biggest one-day loss in more than a quarter of a century, after a disappointing fourth quarter.

Housebuilders endured their worst day in more than two years, dragged by a 6.6% drop in Persimmon after it reported lower annual profit and said its Chief Executive would step down.

But drugmaker Hikma outperformed, adding 4.4% after it forecast sales growth in 2020. (Additional reporting by Tom Westbrook in Singapore; Editing by Bernard Orr and Giles Elgood)

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