UPDATE 3-European shares fall after 3-day rally, but mark best week since 2011

* London stocks extend losses after PM tests positive
* Automobile sector worst performer for the day
* Oil and gas stocks best weekly gainers
* STOXX 600 up 6% for the week

(Updates to close)
By Ambar Warrick
March 27 (Reuters) - European shares closed in the red on
Friday after EU lawmakers failed to agree on a coronavirus
rescue package and British Prime Minister Boris Johnson
announced he had been infected.
The pan-European STOXX 600 index started the day about 2%
lower, then closed down 3.3% after the announcement about
Johnson's test. The declines followed a three-day rally, and the
index marked its best week since 2011. London bluechip stocks .FTSE had extended losses after the
news, closing 5.3% down.
With most of Europe practically under lockdown due to the
virus, a recession appears imminent. EU lawmakers on Thursday
extended the deadline for agreeing on a comprehensive economic
rescue package by two weeks over a dispute between the ailing
south and the fiscally conservative north.
"Perhaps Boris testing positive contributed to the selloff,
though it would have happened anyway," said Andrea Cicione, head
of strategy at TS Lombard, in London. "The bottom line is that
the recovery from this crisis will be a lot slower than
consensus expects. And it will be further slowed down by the
high level of unemployment and lack of capex."
Stephen Innes, chief market strategist at financial services
firm AxiCorp, wrote in a note: "There was no specific new
coordinated action to ramp up the fiscal response to the crisis
and, in particular, no agreement around 'corona bonds'."
A swathe of bumper stimulus measures from around the globe
had bought about a modicum of stability in equity markets,
prompting the three-day rally.
However, with the outbreak showing no signs of slowing,
risk assets are likely due for more pain. Cases in the United
States are now the highest in the world. Oil and gas stocks .SXEP , while dropping 4.6% on the day,
outperformed their peers over the course of the week, surging
about 19% as they continued to recover from a 24-year low.
European carmakers .SXAP were the worst performers on the
day, shedding about 5.8%.
Volkswagen VOWG_p.DE fell 7.3% after its Chief Executive
Herbert Diess said it may have to cut jobs if the pandemic is
not brought under control, as the carmaker is still spending
about 2 billion euros ($2.2 billion) a week. Travel and leisure stocks .SXTP fell 5.8%, with cruise
ship operator Carnival Corp CCL.L slumping nearly 21% to the
bottom of the .STOXX index.
Banks .SX7P dropped 5.4% as the European Banking
Federation said they should halt 2020 dividend payments to
preserve capital and continue to lend until the impact of the
coronavirus epidemic is clearer.