By Susan Mathew and Sagarika Jaisinghani
(Reuters) - European shares eased from record highs on Thursday, as a raft of disappointing earnings added to concerns about the global impact of the coronavirus outbreak after research suggested the illness is more contagious than previously thought.
The pan-European STOXX 600 <.STOXX> shed 0.9%, deepening losses just before close to post their biggest one-day drop in three weeks.
A near 2% fall in insurance stocks <.SXIP> led losses after Swiss Re <SRENH.S> posted a lower-than-expected annual profit. The reinsurer's shares dropped 8.1% to a five-week low.
A slide in Spain's Telefonica <TEF.MC> weighed on the Spanish index <.IBEX> after the telecoms group said one-off charges in Mexico and Argentina hurt its annual profit..
"Today is more of a bottom up day focused on results," said Ingo Schachel, head of equity research at Commerzbank, Germany.
Meanwhile, France's Schneider Electric <SCHN.PA> rallied to an all-time high after its results beat expectations and the firm said it was confident it could offset the impact of the new coronavirus outbreak in China.
But Paris' main index <.FCHI> fell 0.8% as luxury stocks, which derive a chunk of their demand from Chinese customers, fell after a spike in the number of coronavirus cases outside China.
LVMH <LVMH.PA>, Kering <PRTP.PA> and spirits maker Pernod Ricard <PERP.PA> slid between 2.2% and 3.5%.
New research suggested the virus could spread more easily than previously believed, with South Korea and Iran reporting more cases of infection, while two passengers in a virus-hit cruise ship in Japan died.
European equity investors also await flash readings of the Purchasing Managers' Index (PMI) on manufacturing activity in the euro zone, due on Friday.
"The last few PMIs came in rather weaker and the market is clearly aware that risk bets due to the recent health situation will leave a mark in the PMIs," said Commerzbank's Schachel.
While traders foresee a hit to the Chinese economy from the health crisis, expectations of a pickup in growth from the second quarter have kept equity markets near record highs.
The benchmark STOXX 600 index has bounced back from a slight dip in January and is on course for its best monthly gain in a year.
Among other individual movers, British medical tech firm Smith & Nephew <SN.L> jumped 7.3% as its annual sales topped estimates and it forecast another year of revenue growth. Norwegian technology firm Tomra Systems <TOM.OL> surged 19% to top the STOXX 600 on strong quarterly results.
Insurer AXA <AXAF.PA> fell 3.5% as it lowered 2020 profit guidance for its companies-focused XL unit, while medical equipment maker Elekta AB <EKTAb.ST> slid after its quarterly operating profit undershot expectations.
The auto index <.SXAP> was the sole sectoral gainer in Europe with Renault up 3% while Daimler <DAIGn.DE> rose 2.3% after saying it would slim down its Mercedes management to remove duplicate layers between Mercedes-Benz and Daimler AG.
(Reporting by Susan Mathew in Bengaluru; Editing by Frances Kerry)