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* Mining stocks slump on fears virus outbreak may hit China growth
* Luxury goods makers, airlines, hotels tumble
* Miners set for worst day in 6 months
* Over 97% of STOXX companies in red (Updates to close)
Jan 27 (Reuters) - Potential damage to business from China's fast-spreading coronavirus knocked more than 2% off European stocks on Monday, after the world's second biggest economy ramped up travel bans and extended the Lunar New Year holidays.
More than 97% of stocks in the STOXX 600 were trading in the red with many toppling from record highs, wiping out around 180 billion euros of market capitalisation from the European share index.
The biggest jolt was felt by luxury, airlines and hotel issues, which see big demand from Chinese consumers. Europe's major luxury players have lost more than $50 billion in market value since the outbreak last week.
Most major country indices in Europe fell more than 2%, while regional sectors lost at least 1% each.
Germany's DAX slumped almost 3%, while France's CAC posted its worst day in almost four months as LVMH , Christian Dior, Hermes and Gucci owner Kering fell more than 3.6%.
Other companies in the luxury space such as Burberry Group Plc, Moncler SpA, Swiss watchmakers Swatch and Richemont declined between 2.5% and 4.8%.
Comparing the new coronavirus with the SARS outbreak in 2002-03, Bernstein analysts highlighted that Chinese nationals accounted for just 2% of the global luxury goods market in 2003 versus a whopping 35% in 2019.
"Equities are finally beginning to contemplate the possibility that the virus 2019-nCoV (coronavirus) in China will have significant economic impact as the lockdown is now affecting 56 million people," said Peter Garnry, head of equity strategy at Saxo Bank.
Meanwhile, safe-haven investment options such as gold and government bonds rose as the death toll from the outbreak in China increased to 81 and the number of cases of infection jumped by about 30% in a day.
The Euro Stoxx 50 volatility index, European investors' "fear gauge", has jumped to its highest level since Dec. 3.
"With a market looking to take some profit, what you'll probably see until everything clears is a move from risk-on type of holdings to more value-focused holdings and going back to companies that pay decent dividends and are more domestically focused," said Stephan Lueck, senior vice president, European equity sales at Auerbach Grayson.
"For the short-term, we should have a clearer picture in a week to two weeks. So give the market a few weeks to sell-off and if there aren't too many deaths we should see some stability within a month and some normalcy going forward."
With rising travel curbs, flight operators Air France , Lufthansa, cruise line operator Carnival Corp, hotel group Accor and IHG took a hit, with IHG clocking its worst day in more than three years. Europe's travel & leisure index ended at its lowest in to nearly seven weeks.
The basic resources index eyed its worst day in nearly six months hit by growth fears in China, the world's top metals consumer.
(Reporting by Medha Singh and Susan Mathew in Bengaluru, and Thyagaraju Adinarayan in London; Editing by Toby Chopra and Giles Elgood)