UPDATE 2-European shares mark worst day in 3 weeks on weak earnings, virus risks

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* Insurers lead declines as Swiss Re posts weak profit
* Telefonica tumbles as results fail to impress
* Number of coronavirus cases in South Korea rises
* Luxury stocks slide
* Schneider scales record high after upbeat earnings
* Auto sector sole sectoral gainer

(Updates to close)
By Susan Mathew and Sagarika Jaisinghani
Feb 20 (Reuters) - European shares eased from record highs
on Thursday, as a raft of disappointing earnings added to
concerns about the global impact of the coronavirus outbreak
after research suggested the illness is more contagious than
previously thought.
The pan-European STOXX 600 .STOXX shed 0.9%, deepening
losses just before close to post their biggest one-day drop in
three weeks.
A near 2% fall in insurance stocks .SXIP led losses after
Swiss Re SRENH.S posted a lower-than-expected annual profit.
The reinsurer's shares dropped 8.1% to a five-week low.
A slide in Spain's Telefonica TEF.MC weighed on the
Spanish index .IBEX after the telecoms group said one-off
charges in Mexico and Argentina hurt its annual profit.
"Today is more of a bottom up day focused on results," said
Ingo Schachel, head of equity research at Commerzbank, Germany.
Meanwhile, France's Schneider Electric SCHN.PA rallied to
an all-time high after its results beat expectations and the
firm said it was confident it could offset the impact of the new
coronavirus outbreak in China.
But Paris' main index .FCHI fell 0.8% as luxury stocks,
which derive a chunk of their demand from Chinese customers,
fell after a spike in the number of coronavirus cases outside
China.
LVMH LVMH.PA , Kering PRTP.PA and spirits maker Pernod
Ricard PERP.PA slid between 2.2% and 3.5%.
New research suggested the virus could spread more easily
than previously believed, with South Korea and Iran reporting
more cases of infection, while two passengers in a virus-hit
cruise ship in Japan died. European equity investors also await flash readings of the
Purchasing Managers' Index (PMI) on manufacturing activity in
the euro zone, due on Friday.
"The last few PMIs came in rather weaker and the market is
clearly aware that risk bets due to the recent health situation
will leave a mark in the PMIs," said Commerzbank's Schachel.
While traders foresee a hit to the Chinese economy from the
health crisis, expectations of a pickup in growth from the
second quarter have kept equity markets near record highs.
The benchmark STOXX 600 index has bounced back from a slight
dip in January and is on course for its best monthly gain in a
year.
Among other individual movers, British medical tech firm
Smith & Nephew SN.L jumped 7.3% as its annual sales topped
estimates and it forecast another year of revenue growth.
Norwegian technology firm Tomra Systems TOM.OL surged 19% to
top the STOXX 600 on strong quarterly results.
Insurer AXA AXAF.PA fell 3.5% as it lowered 2020 profit
guidance for its companies-focused XL unit, while medical
equipment maker Elekta AB EKTAb.ST slid after its quarterly
operating profit undershot expectations.
The auto index .SXAP was the sole sectoral gainer in
Europe with Renault up 3% while Daimler DAIGn.DE rose 2.3%
after saying it would slim down its Mercedes management to
remove duplicate layers between Mercedes-Benz and Daimler
AG.