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UPDATE 3-Coronavirus fear: UK markets plunge as Johnson ponders response

Andy Bruce and Kylie MacLellan

* FTSE down as much as 8.8%, biggest drop since 2008

* UK government says food supplies will continue

* UK coronavirus cases rises to 319, 4 dead

* EasyJet, BA set to reduce northern Italy flights (Edits headline, adds)

LONDON, March 9 (Reuters) - Coronavirus fears saw British stocks suffer their biggest intraday fall since 2008 and benchmark bond yields turn negative for the first time on Monday but the government said it was not yet time to close mass events and insisted food supplies would continue.

As the worries about the economic impact of the outbreak battered global markets, Britain announced its fourth death from the virus and said that it now had 319 confirmed cases, up from 273 on Sunday.

Prime Minister Boris Johnson held an emergency government meeting to discuss when to bring in more stringent measures, though the government said it was not yet advising the closure of large events. Food supplies, it said, would continue.

"We are confident that food supply will continue even in our reasonable worst case scenario," Health Minister Matt Hancock told parliament. "We have been talking to the supermarkets for some time about this scenario."

The new coronavirus, which emerged in China in December, causes a disease called COVID-19. It has spread around the world, infecting more than 110,000 people and 3,800 people have died worldwide, according to a Reuters tally.

The FTSE 100 plunged to a three-year low after Saudi Arabia crashed the oil prices by slashing its own selling prices and raising output.

Yields on benchmark British government bonds turned negative for the first time ever as panicked investors rushed to the safety of gilts to hedge against the feared economic shock of the coronavirus.

The 2-year gilt yield last stood at -0.032%, down 12.6 basis points on the day. The commodity-heavy FTSE 100 gave up as much as 8.8%, while the domestically focused mid-cap index shed 6.1%.

GOVERNMENT RESPONSE

Britain's emergency scientific group agreed last week that the virus was likely to spread in a significant way.

As some British supermarket shelves were emptied of basics such as lavatory paper, the British government said it had set up a team to tackle "interference and disinformation" around the spread of coronavirus.

The country's biggest retailer, Tesco, has restricted bulk buying of products such as anti-bacterial gels and wipes, dried pasta and long-life milk.

Britain's finance minister is due to deliver his annual budget speech on Wednesday and investors awaiting any indication of additional stimulus from the Bank of England and the government.

UK-based airlines easyJet and British Airways are expected to reduce their flights to northern Italy over the next three and a half weeks after Italian authorities ordered a virtual lockdown of the area. (Additional reporting by Elizabeth Piper, William James, Sarah Young and Michael Holden; Writing by Guy Faulconbridge; editing by Michael Holden/Keith Weir)

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