* Stocks tumble two percent as COVID-19 curbs gather pace
* Little sign of breakthrough in UK-EU trade talks
* Hopes for pre-election U.S. fiscal package fizzle out
(Updates throughout)
By Huw Jones
LONDON, Oct 15 (Reuters) - European shares hit two-week lows
on Thursday, knocked by tougher curbs in London and Paris to
fight a second wave of the COVID-19 pandemic, with no
breakthrough in Brexit trade talks also a dampener.
Wall Street was also set to add to losses from previous
sessions as policymakers in the United States fail to agree on
an economic stimulus package ahead of presidential elections
next month.
Analysts said the biggest pullback in markets in three weeks
was more of a pause than a fundamental shift, however.
"We have to be careful about reading too much into these
moves ahead of the U.S. election coming up," said Ned Rumpeltin,
European Head of Currency Strategy at TD Securities
"There is a general risk-off sort of feel for the day. I
don't really see today in terms of changes in overall trends and
direction."
Europe's leading stock indices 0#.INDEXE all fell by two
percent or more, taking their queue from weaker markets in Asia
overnight, and a Wall Street pulled lower on Tuesday as the
earnings season gathered momentum.
Financials Morgan Stanley and Schwab report on Thursday, and
markets will also take stock of the latest U.S. jobless claims
figures.
Analysts said the rise in coronavirus infections across
Europe and no sign of a vaccine anytime soon after two
high-profile prospects experienced problems was hitting
sentiment.
London was headed for a tighter lockdown, with France also
introducing tighter curbs in Paris and other major cities.
Hopes for a U.S. package to boost the coronavirus-hit
economy before the presidential election next month have also
fizzled out after U.S. Treasury Secretary Steven Mnuchin said
such a deal would be difficult.
"It's all pointing to a greater hit to fourth quarter
activity and warrants a degree of adjustment in market pricing,"
said Derek Halpenny, head of research at MUFG.
The pan-European STOXX 600 .STOXX was down 2.1% to a near
two-week low, with markets in London .FTSE and Paris .FCHI
lower 2%-2.2% and Frankfurt .GDAXI and Milan .FTMIB
2.6%-2.7% weaker.
BREXIT ON EU SUMMIT MENU
A two-day summit of European Union leaders starts on
Thursday as the EU and Britain continue their efforts to
overcome stumbling blocks, such as fishing rights and
competition safeguards, to agreeing a trade deal before the UK's
Brexit transition arrangements end on Dec. 31. The pound slipped 0.4% to $1.2950 whereas the euro drooped
0.25% against the dollar to $1.1716, its lowest in a week.
GBP=D3
Investors will tune into European Central Bank President
Christine Lagarde, who takes part in a debate on the global
economy at 1600 GMT as part of the IMF and World Bank's annual
meeting which is being held virtually.
In Asia, MSCI's broadest index of Asia-Pacific shares
.MIAPJ0000PUS lost 1.3% with Hong Kong .HIS and India
.NSEI both down over 2% and Japan's Nikkei .N225 closing
down 0.5%.
U.S. S&P 500 futures ESc1 were pointing to a 0.6% drop
while the Nasdaq equivalent sank 1.2%. On Wednesday, the S&P 500
.SPX closed down 0.7% and the Nasdaq Composite Index .IXIC
shed 0.8%.
With traders seeking safety again, Germany's government
bonds rallied to leave their yields at their lowest level since
the March spread of COVID-19 caused the global meltdown in stock
markets and other riskier assets. DE10YT=RR . GVD/EUR
Oil prices also fell as the renewed surge in the virus in
large parts of the world underpinned concerns about economic
activity.
Brent crude LCOc1 futures dropped 2.3% to $42.31 a barrel,
U.S. West Texas Intermediate (WTI) crude CLc1 futures dropped
back to $39.97 a barrel while gold XAU= and industrial metals
like copper /MCU3=LX were broadly flat.
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Coronavirus second waves slamming Europe https://tmsnrt.rs/340a5VR
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