Coronavirus: FTSE 100 suffers worst day since Black Monday 1987 crash as £160bn is wiped off UK shares

Rapid sell-off follows World Health Organisation’s declaration of pandemic and Trump’s announcement of travel ban

The FTSE 100 plunged 11 per cent on Thursday as the index suffered its worst session since the “Black Monday” stock-market crash in 1987.

Stock markets tumbled across Europe after the World Health Organisation declared on Wednesday that the coronavirus outbreak is a pandemic and Donald Trump announced a ban on travel to the US from Europe.

The rapid sell-off wiped £160bn off the FTSE 100’s value as investors and traders weighed up the economic impact of a potential new wave of travel restrictions and lockdowns.

It came as the government’s chief scientific adviser, Patrick Vallance, said the number of people infected with the coronavirus in the UK could be as high as 10,000, while the death toll in Italy rose beyond 1,000.

By lunchtime on Thursday, the FTSE 100 had dropped 7 per cent, as every share on the index went into the red. Losses continued throughout the afternoon, taking the index into “bear market” territory, meaning a fall of 20 per cent from a recent peak.

The FTSE 250 dropped 9.4 per cent, with Cineworld among the biggest fallers after it warned that it may not be able to pay its debts because of a hit to trade from the coronavirus. Finablr, which owns foreign exchange provider Travelex, plunged 50 per cent.

The Vix volatility index, known as Wall Street’s “fear gauge”, hit its highest level since the 2008 financial crisis.

Markets across Europe also plummeted, with Germany’s Dax index down 12.2 per cent and France’s CAC 40 down 12.3 per cent.

US markets rose in early trading after the Federal Reserve pumped hundreds of billions of dollars into the financial system in a bid to mitigate the fallout from the pandemic.

Mr Trump shocked markets on Wednesday night by instigating a 30-day ban on travel to America from mainland Europe.

The UK and Ireland are excluded from the ban, he said, as he accused the EU of failing to implement adequate restrictions on travel from China.

Several insurers have withdrawn travel insurance policies or excluded coronavirus-related claims after the World Health Organisation declared a pandemic on Wednesday.

LV= withdrew travel insurance policies, while the Post Office, Aviva and InsureandGo will no longer pay out on claims related to the virus, including cancelled trips.

The European Central Bank (ECB) launched further monetary stimulus measures on Thursday in a bid to support the eurozone economy.

It laid out plans to buy up an additional €120bn (£106bn) of bonds this year and ensure cheap loans are offered to small and medium-sized firms. Key eurozone interest rates were left unchanged, however.

“The coronavirus is proving to be a significant shock to our economies,” said Andrea Enria, the chair of the ECB’s supervisory board.

“Banks need to be in a position to continue financing households and corporates experiencing temporary difficulties.

“The supervisory measures agreed today aim to support banks in serving the economy and addressing operational challenges, including the pressure on their staff.”

As sports events were cancelled and schools closed in several nations, the UK government was accused of complacency in its sluggish response to the virus.

John Ashton, a former regional director of Public Health England, raged at what he labelled a “wooden and academic” response to Covid-19, warning: “We’ve wasted a month when we should have been engaging with the public”.