By Ambar Warrick
(Reuters) - European shares hit a record high on Tuesday as the number of new coronavirus cases slowed in China and the country's factories slowly returned to work, easing some concerns of a long-drawn impact to the global economy.
The pan-European STOXX 600 index (STOXX) rose as much as 0.9% to a record high of 428.30. The index has seen several volatile weeks following the news of the virus outbreak.
Markets have been weighing the economic impact even as China infused liquidity in an attempt to soften the blow on the world's second-largest economy.
"Some aspects of the Chinese economy are beginning to return to work- Maybe China isn't going through the complete grind to halt that we were pricing in a week ago," said David Madden, analyst at CMC Markets in London.
"Even with the health crisis getting worse, the economy in China is possibly in better shape than we initially thought."
However, with the death toll from the virus now crossing 1000, markets remained worried that the extent of economic disruption could be greater than estimated.
Travel and leisure stocks (SXTP) were the best performing European sector, rising about 1.4%. Worries over travel disruptions caused by the virus had led to a heavy selloff in the sector over the past few weeks.
Travel company TUI (L:TUIT) led gains after it lifted the lower end of its annual earnings guidance, citing strong holiday demand. The stock was also the best performer on the STOXX 600.
Basic resources stocks (SXPP) rose about 0.8% on an uptick in iron ore and base metal prices.
Mining heavyweights BHP Group PLC (L:BHPB) and Rio Tinto PLC (L:RIO) gained as higher commodity prices pointed to better margins for the two, which export heavily to China. [IRONORE/] [MET/L]
European oil and gas stocks (SXPP) tracked a rebound in crude prices. Norwegian oil and gas explorer Aker BP (OL:AKERBP) rose 2.4% after clocking better-than-expected fourth quarter core earnings. [O/R]
Automobile stocks (SXAP) dropped, with German carmaker Daimler AG (DE:DAIGn) dragging the most after it cut its dividend following a plunge in its 2019 earnings.
