Fears about the virus also sparked a flight to the safety of bonds.

A 3.6% fall for the FTSE 100 erased its gains from earlier in the week. Only six stocks on the index ended Friday's session in the black, and only British Airways owner IAG registered a rise of more than a percent.

The domestically focussed mid-cap index dipped about 3%, joining the FTSE 100 in its second straight week of declines, with event organiser Hyve falling 16.4% a day after it said revenue and profit in 2020 will be hit after it postponed events in Asia and the United States because of the epidemic.

"It was a sour end to the week for markets as investors' hopes over a full blown equity recovery were dashed," Russ Mould, investment director at AJ Bell, said.

"Following renewed selling on Wall Street last night, Asia, Europe and UK stocks traded lower on Friday as markets remained very fearful about the economic and social impact of the coronavirus," he added.

Interest rate-sensitive bank stocks <.FTNMX8350> shed 2.3%, as traders bet on further monetary easing by the U.S. Federal Reserve after an emergency rate cut on Tuesday that sent benchmark Treasury yields to record lows.

London's food and drug retailing sector was the biggest casualty, behind travel and leisure <.FTNMX5750> stocks, as the epidemic wreaked havoc on supply chains and forced some European companies to evacuate offices.

Airlines and cruise operators continued to slump on crippled travel demand.

Britain said on Thursday that an older person with underlying health problems had died of the virus, and the number of infections had risen to 116 by Friday.

The resulting hit to business activity has prompted sharp cuts to global economic growth forecasts for the year, while the market's fear gauge marked its sharpest jump on record in this quarter.

"Non-stop news headlines about the spread of coronavirus has caused investors to be very concerned about a global recession. This tension is likely to remain front and centre until we get some evidence that the virus can be contained," Mould said.

Underlining the worries about economic disruption, cinema operator Cineworld slid 8.6% despite saying it had not observed any significant impact on its movie theatre admissions.

Cruise operator Carnival hit its lowest level since 2012 and was among the top decliners on the FTSE 100, a day after its Grand Princess ocean liner was barred from returning to its home port of San Francisco on virus fears.

Among other stocks, miner Anglo American fell 8.7% to the bottom of London's top index. It owns 77% of South Africa's Anglo American Platinum, which declared force majeure and cut its production outlook after an explosion led to a shutdown of processing facilities.

(Reporting by Devik Jain, Shivani Kumaresan and C Nivedita in Bengaluru; Editing by Bernard Orr, Sagarika Jaisinghani and Uttaresh.V and Frances Kerry)

By Devik Jain and Noor Zainab Hussain