UPDATE 2-European shares reverse course to end higher on defensive plays

  • Reuters
UPDATE 2-European shares reverse course to end higher on defensive plays

* STOXX 600 set for second-worst quarter ever

* Healthcare stocks biggest boost to STOXX 600

* Most gains made in last hour of trade

* Banking index slumps as lenders freeze dividends (Updates to close)

By Ambar Warrick and Sagarika Jaisinghani

March 30 (Reuters) - European stocks closed higher on Monday after last-minute gains, with buying focused largely on defensive sectors amid plummeting oil prices and continued anxiety over the coronavirus.

The pan-European STOXX 600 index .STOXX closed up 1.1%, having dropped about 1% earlier in the day. A stronger open on Wall Street, spurred by optimism over battling the outbreak's economic impact, also lent support late in the European session. .N

Still, the benchmark was a long way from a peak hit in late-February, and likely to record its second-worst quarter ever, owing to the panic selling brought about by the coronavirus.

The healthcare sector .SXDP was the biggest boost to the STOXX 600, closing about 3% higher as fears of the coronavirus kept investors trading cautiously. Utilities .SX6P and telecom .SXKP stocks also rose on the day.

Belgian-Dutch biotech company Galapagos GLPG.AS jumped about 6% after Jefferies upgraded the stock to 'buy', citing potential in the firm's lead product. stocks .SXEP shrugged off a slump in oil prices, adding about 3%. However, the gains were meagre compared to what has been lost over the past month, when a crash in prices had seen the sector plumb a 24-year low and prompted widespread scaling back by major producers.

"The demand hit is weighing heavily on oil prices, and European oil & gas majors are responding to the situation by cancelling share buybacks and reducing capital expenditure," ING analysts wrote in a note.

"These actions, combined with the companies' robust liquidity and leverage positions should limit the extent of negative credit rating actions."

Chemical producers .SX4P were the best performing sector for the day, rising about 3.9%, with several firms looking to benefit from lower crude prices.

On the other hand, bank stocks .SX7P slumped 3.1% as lenders complied with the European Central Bank's call to freeze dividends in a bid to shore up credit, with the pandemic causing a liquidity squeeze across the bloc. bank-heavy Ibex index .IBEX dropped 1.7%.

Travel and leisure stocks .SXTP , among the worst hit from the virtual halt in global travel, fell 0.6% on Monday as JP Morgan forecast a 42% slump in aftermarket sales in the European civil aerospace sector in 2020. mid-cap stocks .FTMC fell as a senior medical officer said the lockdown in Britain could last for months. .L

British shopping centre owner Hammerson HMSO.L plummeted 22%, bottoming out the STOXX 600 after it suspended its guidance and its 2019 dividend.

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