UPDATE 2-European shares end red as virus uncertainty dashes initial gains

* STOXX 600 firmly in bear territory
* Italian stocks extend losses amid lockdown
* Coronavirus cases rise across the bloc
* Airline stocks get some respite from easing of slots rule

(Updates to close)
By Ambar Warrick and Sruthi Shankar
March 10 (Reuters) - An early recovery proved short-lived
for European shares on Tuesday with no end in sight to the
coronavirus outbreak, as a jump in infections across the bloc
unsettled investors already reeling from the oil price crash.
The pan-European STOXX 600 .STOXX closed 1.1% down,
slipping further into bear territory after marking its worst day
since the 2008 financial crisis on Monday.
A surprise crash in oil prices compounded worries over a
recession due to the outbreak, and had pushed oil and gas stocks
.SXEP into their worst drop ever on Monday.
However, with Italy now under lockdown, and Britain and
Germany reporting higher cases of infection, investors have
little impetus to stay in risk assets with widespread
disruptions from the virus appearing to be likely.
"Traders are a bit nervy, the only positive news we've been
getting out is probably rate cuts or tax cuts - we need news in
terms of the actual control of the virus, which we don't seem to
be having right now," said Michael Baker, analyst at ETX Capital
in London.
A surprise jump in Swedish cases of the virus also fed more
uncertainty into markets. Italian stocks .FTMIB shed early gains to close at a
more-than three-year low. The government is set to approve
measures worth around 10 billion euros ($11.35 billion) to
counteract the impact of the virus. German stocks .GDAXI ended more than 1% lower, as
coronavirus cases in Europe's largest economy rose over 1,100.
A Deutsche Bank DBKGn.DE economist expects the country's
economy to shrink in 2020 due to the impact of the virus.
Among individual movers, Germany's Commerzbank CBKG.DE
closed up 3% after it said it was yet to see any impact from the
outbreak on its business.
Italian highway operator Atlantia ATL.MI ended at a
more-than six-year low amid concerns over a severe fall in
traffic due to the outbreak.
German logistics firm Deutsche Post DPWGn.DE jumped 6%
after saying it had started to see volumes in China recover from
the impact of the coronavirus outbreak, and announced a bigger
than expected annual dividend. Airline stocks also rose about 0.2% to 4% after the European
Union, in a move to give airlines more breathing space amid
headwinds from the coronavirus, said it would suspend a rule
requiring carriers to run most of their scheduled services or
else forfeit landing slots. Traders are now betting on an interest rate cut by the ECB
later this week, although many see the bank having little room
to cut, given that rates are already in negative territory.