European stocks were lower around midday on Monday as fears of a swine flu pandemic hit airline, travel, bank and energy shares on worries that travel and trade would be hit.
At 1048 GMT the FTSEurofirst 300 index of top European shares was down 1 percent at 802.04 points, having dipped as low as 795.54.
"The effect on the market is likely to be temporary, though obviously nobody knows what is going to happen," said Arthur Van Slooten, a strategist at Societe Generale, in Paris.
"There has been some wild speculation. But this can create a nice entry point, and we would buy into weakness."
Airline stocks were hit by fears that the outbreak would hit travel, with British Airways, Air France-KLM and Deutsche Lufthansa falling between 7.3 and 10 percent.
Cruise operator Carnival, owner of Cunard, was down 6.9 percent.
French hotel major Accor lost 6.3 percent, while travel groups Thomas Cook Group, TUI Travel and TUI AG were all down more than 4 percent.
"The threat of the pandemic will add further weakness to global trade. We saw with SARS tangible percentage points knocked off the index, and that was in a buoyant time. Put that in a weaker time and it is likely to be more unpleasant," said Justin Urquhart Stewart, investment director at Seven Investment Management.
Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were between 0.6 and 1.1 percent lower.
DRUGMAKERS RISE
Drugmakers were higher, however, luring investors with the potential for medicines and vaccines against the virus.
GlaxoSmithKline and Roche were up 3.1 and 3.9 percent, respectively.
Sperian Protection, the maker of protective equipment, soared 15.6 percent as it was seen benefiting from the threat of a pandemic.
Shares in Marine Harvest Group, the world's biggest fish farmer, rose more than 9 percent, with traders speculating that swine flu could lift salmon prices as witnessed during previous outbreaks of bird flu and cow disease.
Banks took most points off the index. HSBC, Banco Santander and Credit Agricole were down between 2.5 and 4 percent.
Societe Generale fell 3.7 percent. It denied a newspaper report that it wrote down 5 billion euros ($6.6 billion) in assets last year as a result of trading losses at a unit and was left with a similar amount of toxic products. Oil and gas company shares were lower as crude fell 5 percent to $49 a barrel. BP fell 1.2 percent, ahead of its first-quarter results on Tuesday.
Royal Dutch Shell and StatoilHydro were down 0.8 and 2.6 percent, respectively.
Miners fell as copper lost 3.5 percent. Anglo American, BHP Billiton, Rio Tinto and Xstrata slipped 2 to 3 percent.
British insurer Aviva rose 2.4 percent after it reported an increase in its capital cushion and said its first-quarter sales rose by a better-than-expected 11 percent.
The FTSEurofirst 300 index of top European shares is up more than 24 percent from its March 9 low. It fell 45 percent in 2008, hit by the banking crisis and recession in several major economies.
"Economic data seem to indicate that the recession won't be as long as some had feared, or at least that we've reached the bottom. But markets have taken in quite a bit of the good news already," SG's Van Slooten said. Wall Street also looked likely to take a hit from the swine flu, with futures for the Dow Jones, S&P 500 and Nasdaq down between 1.5 and 1.7 percent.
