UPDATE 2-European shares tumble on J&J vaccine worries, banks slide

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* Airbus slips after JPMorgan downgrade
* Bank stocks mark worst day in three weeks
* UK unemployment hits highest level in over three years
* French Connection slumps after first-half results

(Updates to close)
By Sagarika Jaisinghani
Oct 13 (Reuters) - European shares fell on Tuesday as
Johnson & Johnson's move to pause its COVID-19 clinical trials
raised doubts about the timeline of a vaccine, while bank stocks
tracked a slide in bond yields on bets of more stimulus by the
European Central Bank.
A month after AstraZeneca AZN.L suspended late-stage
trials of its vaccine candidate, Johnson & Johnson JNJ.N said
it had temporarily halted trials due to an unexplained illness
in a study participant. The pan-European STOXX 600 .STOXX snapped a three-day
winning streak to fall 0.6%, with banks .SX7P slumping 2.7% as
long-dated sovereign bond yields in Italy and Greece sank to
record lows. Only the telecoms .SXKP , media .SXMP and tech .SX8P
sectors ended the day marginally higher. Still, analysts said
the news was unlikely to spark a prolonged sell-off in equity
markets.
"With numerous vaccines in the pipeline, this setback might
not be viewed too negatively unless the unexplained illness
becomes more expensive in other trials," said Stephen Innes, a
markets strategist at Axi.
Investors were also digesting mixed signals on more U.S.
fiscal aid, with House Speaker Nancy Pelosi saying a recent
offer from President Donald Trump fell far short of what the
American people need, but added she still hoped a deal could be
reached. The U.S. S&P 500 .SPX and the blue-chip Dow .DJI indexes
lost 0.3%. .N
Hopes of more U.S. fiscal aid and signs of an economic
rebound have powered European stock markets, helping the
benchmark STOXX 600 on Monday to hit its highest close in nearly
a month.
Losses on Tuesday were led by German .GDAXI and British
mid-cap .FTMC stocks as data signalled a long road to
pre-pandemic economic output.
German investor sentiment fell more than expected in October
on a triple whammy of coronavirus, Brexit and U.S. election
angst, while in Britain, the unemployment rate rose in the three
months to August to hit its highest in more than three years.
"UK unemployment is unfortunately set to rise further on the
combined impact of fresh COVID-19 restrictions and the end of
the original furlough scheme," said ING economist James Smith.
In company news, Airbus SE AIR.PA fell 3.5% as JPMorgan
cuts its rating on the planemaker's stock to "underweight" from
"neutral". British clothing retailer French Connection Group Plc
FCCN.L slumped 19.6% in its worst session since March after
posting a slump in first-half sales due to the health crisis.