UPDATE 2-HSBC and Nokia drag European stocks lower amid virus worries

(For a live blog on European stocks, type LIVE/ in an Eikon
news window)
* HSBC hit by report Trump aides want to undermine USD/HKD
peg
* Nokia falls on concerns over potential loss of Verizon
business
* Britain cuts VAT for hospitality sector; FTMC hits session
highs
* Ostred jumps; signs power deal with Taiwan's TSMC

(Updates to close)
By Sruthi Shankar and Susan Mathew
July 8 (Reuters) - HSBC and Nokia dragged European shares
lower on Wednesday as a surge in coronavirus cases appeared to
threaten a recovery in the global economy, while Britain's plan
to head off an unemployment crisis cushioned a fall in London's
domestically focused stocks.
The pan-European STOXX 600 .STOXX fell 0.7% with banks
.SX7P , travel & leisure .SXTP and auto stocks .SXEP
dragging. Limiting losses were gains in basic material stocks
.SXPP and utilities .SX6P .
The UK mid-caps index .FTMC cut some session losses before
closing 1% down, after finance minister Rishi Sunak promised an
additional 30 billion pounds ($38 billion) in stimulus. This
included bonuses to get furloughed staff back to work and a cut
in value added tax for the hospitality sector. Economists and strategists at ING said that, while the
announcements were innovative, they were unlikely to completely
change the game for the UK's economic outlook and would provide
only a small respite for markets.
ING's James Smith and Petr Krpata said uncertainty
surrounding UK-EU trade negotiations would "dominate the story",
especially for sterling.
London's blue-chip index .FTSE was weighed down by HSBC
HSBA.L tumbling 3% after Bloomberg reported that U.S.
President Donald Trump's top advisers had considered measures to
undermine the Hong Kong currency's peg to the U.S. dollar. The
proposal could potentially limit the ability of Hong Kong banks
to buy dollars. On the STOXX 600, Nokia NOKIA.HE was the worst performer,
slumping 8.1% on concerns that it was losing the business of its
key client Verizon VZ.N in the United States. JPMorgan
downgraded it to "neutral". Pressuring hopes for global recovery, U.S. coronavirus
outbreak crossed a grim milestone of over 3 million confirmed
cases, while the World Health Organization acknowledged
"evidence emerging" that the virus could spread through the air.
The STOXX 600 had climbed to a near one-month high earlier
this week as improving economic data and bets of a swift rebound
in China drove gains, but investors remained cautious about the
progress of a European Union recovery fund and the upcoming
earnings season.
Analysts expect companies listed on the STOXX 600 to report
a 53.9% decline in profit in the second quarter, according to
Refinitiv data.
Denmark's Orsted ORSTED.CO jumped 4.8% after signing the
world's largest corporate renewable power deal with Taiwan
Semiconductor Manufacturing Co 2330.TW . The UK online fashion retailer Boohoo BOOH.L slumped for
the sixth day running, hit by news that Next Plc NXT.L ,
Zalando SE ZALG.DE and Amazon.com Inc AMZN.O were delisting
its products.