UPDATE 2-European stocks end lower as COVID-19 economic toll becomes clearer

* Insurers the biggest drag amid calls for a freeze in
dividends
* EU business activity contracts sharply in March
* Bank stocks worst weekly performers
* Energy stocks lead weekly gains

(Updates to close)
By Ambar Warrick and Sagarika Jaisinghani
April 3 (Reuters) - European shares ended down on Friday,
closing the week lower as dismal business activity data heralded
a deep economic and earnings recession due to the novel
coronavirus outbreak.
The pan-European STOXX 600 index .STOXX closed 1% in the
red, with insurers .SXIP dragging the most after a European
Union regulator asked them to suspend dividends and share
buybacks to shore up liquidity. The index fell about 0.6% for the week. Still, it appeared
to have gained a measure of stability after sharp daily
movements over the past month.
Composite data earlier in the day showed business activity
in the euro zone contracted severely in March, with several
analysts forecasting worse readings as most economies in the
region shut down to curb the spread of the virus. "We are entering a climate with lower or no dividends, fewer
financial options, but most importantly, fewer jobs and lower
output," said Stephen Innes, a strategist at AxiCorp.
"Many small- and large-sized businesses will not survive
this storm."
With more than 1 million people now infected around the
world and countries extending national lockdowns, economists
expect euro area real GDP to shrink as much as 43% in the second
quarter. Bank stocks .SX7P fell 2.2%, and were the worst performing
European sector for the week, shedding about 11%. The sector
looked vastly less attractive after several banking majors
suspended their dividend payouts earlier in the week.
Energy stocks .SXEP dragged on the STOXX 600,
relinquishing most of their gains from Thursday after a record
spike in oil prices on hopes that Saudi Arabia and Russia would
end their price war.
"We doubt that the rally in oil prices of the past couple of
days will last, even if Russia and Saudi Arabia agree a deal to
cut output - we only expect lower supply to put a floor under
prices." Capital Economics said in a note.
The bump in prices, along with extremely low stock
valuations in the sector, saw energy stocks outperforming other
sectors for the week with a 9% gain.
Healthcare stocks .SXDP were among the few gainers for the
day, as the sector continued to benefit from safe-haven demand.
They added 5.8% for the week.
Retail stocks .SXRP also gained after data showed euro
zone retail sales jumped by more than expected in February, the
month before coronavirus measures spread across the continent,
as shoppers stocked up on food and drink and sharply increased
their online spending.