European markets closed slightly higher Monday as investors weighed prospects for a global monetary policy response to mitigate the economic impact of the coronavirus.
European markets
The pan-European Stoxx 600 closed up by 0.1% provisionally, having earlier risen as much as 2% in what was a choppy trading session. Most sectors and major bourses were in positive territory.
Hopes have been rising that central banks could introduce stimulus measures to lessen the impact of the outbreak on the global economy, following a sharp increase in coronavirus cases outside of China, including in the U.S and Europe. However, the positive market reaction on Monday was short-lived.
In total, there have now been more than 89,000 cases of the virus confirmed globally and over 3,000 deaths. The U.S. reported its second death from the virus and New York reported its first case Sunday.
Global stock markets saw heavy losses last week, experiencing the worst declines since the 2008 financial crisis. On Wall Street, equities rebounded from the sell-off on Monday, with the Dow Jones Industrial Average up about 600 points.
The uptick in sentiment has been driven in part by comments from Bank of Japan (BOJ) Governor Haruhiko Kuroda, who said the BOJ will "strive to stabilize markets and offer sufficient liquidity via market operations and asset purchases."
However, the latest Chinese manufacturing data for February came in much worse than expected.  A private survey released Monday that showed factory activity in China slumping to a record low in February.
There is mounting speculation that central banks could intervene to stimulate the economy to mitigate the financial impact of the coronavirus. On Friday, U.S. Federal Reserve Chairman Jerome Powell said that the coronavirus "poses evolving risks to economic activity" and that the Fed would "use our tools and act as appropriate to support the economy."
In other news, the U.K. and EU are set to begin a first round of post-Brexit trade talks on Monday. EU ministers have said that they are ready to offer a "substantial, ambitious and wide-ranging partnership" to the U.K, while the government in London has said "that a Comprehensive Free Trade Agreement should be at its core" in upcoming talks.
Biggest movers
Italian banks took a hammering as shareholders balked at the possibility of even lower interest rates in Europe. Banco BPM, Ubi Banca and Unicredit fell 6%, 5% and 4% respectively.
Airlines also suffered, with British Airways parent IAG and Air France KLM shedding around 8% and Lufthansa dropping 6.5%.
Mobile operator SES plunged 30% to the bottom of the European benchmark after its 2019 full-year earnings report.
British online supermarket Ocado meanwhile jumped 5% after reporting a spike in demand amid the coronavirus spread, while Austrian real estate company Immofinanz jumped almost 8% to lead the Stoxx 600.