March 2, 2020 / 10:54 AM / in a month

UPDATE 2-European shares steady; Italy extends coronavirus-driven slide

* Ryanair falls on plans to cut Italy flights by 25%

* Nokia gains after announcing CEO change

* SES slumps after downbeat 2020 forecast

* Battered Italian shares slide again (Adds comments, updates to close)

By Sruthi Shankar and Shreyashi Sanyal

March 2 (Reuters) - European shares edged higher at the close after seesawing for most of the session on Monday, as traders swung their attention to the extra injections of support they now expect major central banks to provide following the coronavirus outbreak.

The pan-European STOXX 600 index closed 0.1% higher after a 12% slump last week, their worst weekly showing since the 2008 financial crisis. Oil & gas companies led gains as crude prices jumped 5%.

Sentiment firmed as bleak February factory activity data out of China due to the virus fuelled hopes of more stimulus, even as new infections in the country declined.

“The sizable though not recessionary hit to global growth is also being met with a policy response to mitigate some of the negative economic consequences,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

“This should ultimately bode well for risk assets, but volatility is likely to remain high in the near term until this path becomes more apparent.”

The virus continues to spread elsewhere. The United States reported its second death, while the United Kingdom reported a total of 36 cases as of Sunday.

Italy, the worst-hit in Europe, saw its death toll rise to 52 from 34 within 24 hours. Battered Milan stocks kept sliding, despite reports the government will introduce measures worth 3.6 billion euros ($3.5 billion), or 0.2% of gross domestic product (GDP), this week to soften the blow.

Traders are now betting that the U.S. Federal Reserve will cut interest rates by 50 basis points (bps) as early as this month, while the European Central Bank is expected to cut rates by a 10 bps at its April meeting.

Investors paid little attention to data which showed Germany’s manufacturing sector eased further in February. IHS Markit said the prospect of disruptions to supply chains due to the virus outbreak means the data could be misleading.

Meanwhile, Britain and the European Union were due to begin talks on their future relationship after Brexit. Both sides say they want to reach a deal by the end of the year.

Travel & leisure stocks continued to decline, falling 2.7%, hurt by a nearly 5% drop in shares of Ireland’s Ryanair.

The budget airline said it will cut its routes in and out of Italy, one of its largest markets, by 25% for three weeks, due to a significant drop-off in bookings since the virus outbreak.

Telecoms equipment maker Nokia rose 1.4% as long-time Chief Executive Officer Rajeev Suri plans to step down in September.

Satellite operator SES slumped 30% after it cut its 2020 core profit and revenue forecasts, projecting a slowdown in its video and networks divisions. (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Sriraj Kalluvila and Mark Heinrich)

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