By Susan Mathew
(Reuters) - European shares dropped on Tuesday as a revenue warning from Apple hammered iPhone parts makers and underlined the impact of the coronavirus outbreak on global supply chains.
However, the pan-European STOXX 600 index <.STOXX> ended off session lows helped by defensive buying as well as merger activity among Italian banks.
Milan shares <.FTMIB> closed at their highest in over a decade as Intesa Sanpaolo's
Italy's banking index <.FTIT8300> jumped 1.6% to close at a 1-1/2 year high, with UBI Banca soaring 24%.
Stock markets globally slid on Tuesday after Apple
After falling up to 0.9% during the session, the STOXX 600 closed 0.4% lower, retreating from Monday's record highs.
"Investors are clearly very keen to keep buying," said Connor Campbell, analyst at financial spread better Spreadex. "It took something like a warning from Apple that investors weren't willing to ignore."
Shares of AMS AG
Other China-exposed sectors such as automobile <.SXAP> and basic materials <.SXPP> were the worst hit on the day.
Miner BHP Group
British lender HSBC Holdings
On the data front, a survey on Tuesday showed German investor morale deteriorated far more than expected in February on worries of the outbreak impacting world trade. Manufacturing PMIs from the eurozone on Friday will be keenly watched for more insights into the economic fallout from the epidemic.
Defensive sectors such as utilities <.SX6P> and real estate <.SX86P> were among the few gainers.
Among bright spots, food ingredients company Kerry Group
(Reporting by Ambar Warrick in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)