By Ambar Warrick
Feb 13 (Reuters) - European shares fell on Thursday as a surge in new coronavirus cases in China blindsided investors, with food giant Nestle weighing the most after it postponed its 2020 growth target.
The pan-European STOXX 600 index .STOXX fell 0.5% by 0900 GMT. It had notched new highs in the last two sessions on optimism over what appeared to be a decline in new cases of infection, as well as a slow restart in factory activity after an extended break in China.
But a jump in new cases after China deployed a new diagnostic method and a record rise in the death toll dashed hopes that the epidemic was slowing and swiftly subdued risk appetite.
"We shaved off a couple of percentage points from the Q1 GDP in China," said Simona Gambarini, markets economist at Capital Economics in London.
"If the virus is brought under control, this will be temporary and would be offset in the second half of the year."
Auto sales in China are likely to have fallen 18% in January, their 19th straight month of decline, with the virus outbreak further hurting demand.
Meanwhile, Nestle SA NESN.S, the biggest firm on the STOXX 600 by market capitalization, dropped 2.1% after it pushed back its 2020 growth target to over the next two years.
European sectors with heavy exposure to China, such as basic resources .SXPP and automobile stocks .SXAP fell 1.4% and 1.2%, respectively.
European industrial .SXNP, real estate .SX86P and healthcare sectors .SXDP benefited from some defensive buying, with the subindexes trading slightly below record highs.
Among individual movers, British utility Centrica PLC CNA.L plunged to the bottom of the STOXX 600 after it posted a 35% slump in its annual profit.
French electrical parts maker Rexel SA RXL.PA topped the index after clocking a 20% jump in its 2019 net income.
Meanwhile, analysts are expecting a 0.6% decline in fourth-quarter European corporate earnings, Refinitiv data showed, with most sectors still reeling from the impact of the U.S.-China trade war.
(Reporting by Ambar Warrick in Bengaluru; Editing by Arun Koyyur)
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