* Energy and mining stocks lead gains
* Traders shrug off data showing plunge in business activity
* Italian shares jump as data shows new virus cases slowing
* Jumping back into stocks will need “nerves of steel”- Analyst (Updates to close)
By Ambar Warrick and Sagarika Jaisinghani
March 24 (Reuters) - European shares surged on Tuesday, recovering a week’s worth of losses as the prospect of some stability from recent stimulus measures saw buying into markets wallowing around seven-year lows.
The pan-European STOXX 600 index jumped 8.4% in its strongest session since late-2008. The index was still roughly 30% down from a record peak hit in February, after fears over the economic shock from the coronavirus spurred panicked selling across the board in recent weeks.
Nearly all of the index’s constituents were trading positive, with a jump in equities across the Atlantic also bolstering sentiment. Low valuations were seen prompting some degree of bargain hunting.
With several major governments and central banks announcing measures to boost liquidity and offset the coronavirus outbreak’s impact, investors hoped for some stability in markets amid skyrocketing volatility.
Europe’s so-called fear gauge fell to 52.53, its lowest in nearly two weeks, after having spiked to 12-year highs earlier in the month.
“Considering how these markets have traded over the last month, I’m certainly not confident that the worst of the rout is behind us, but we have seen a little more stability over the last week or so,” Craig Erlam, senior market analyst, UK and EMEA at OANDA, wrote in a note.
The European basic resources and oil and gas sub-sectors were the best performers for the day, adding more than 15% each. Both sectors recovered from multi-year lows.
Base metal and oil prices also surged on the day.
Traders hardly reacted to worse-than-expected figures showing euro zone business activity crumbled in March as shops, restaurants and offices pulled down their shutters.
Italian stocks surged nearly 9%, marking their best day in nearly a decade as latest numbers showing a slowdown in new cases of COVID-19 raised hopes that the most aggressive phase of the outbreak may be passing.
“ It’s still early days (in the outbreak), of course - perhaps investors can start to envisage life beyond the coronavirus. That could make stocks look a little more attractive, although anyone jumping back in now will need to have nerves of steel,” Oanda’s Erlam said.
German stocks jumped nearly 11%, while British bluechips added 9%. Both bourses saw their best sessions since 2008.
Among individual movers, British travel and leisure stocks Cineworld and Carnival topped the STOXX 600, bouncing back from severe drops in valuation.
Takeaway.com, Europe’s largest online food ordering service, closed 9.3% higher after it said late Monday that it would grant a delay in payments for Dutch restaurants on its platform that have been hit by the coronavirus. (Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Bernard Orr and Alex Richardson)