Europe region-specific exchange traded funds were dealt a heavy blow, with European markets suffering their worst weekly decline since mid-June, on growing fears of a second wave of coronavirus infections that could hinder the economic recovery process.

Over the past week, the Vanguard FTSE Europe Index Fund ETF Shares (NYSEArca: VGK) fell 1.6%, JPMorgan BetaBuilders Europe ETF (BBEU) dropped 5.4% and iShares MSCI Eurozone ETF (BATS: EZU) declined 5.8%.

The pan-European STOXX 600 index decreased 3.6% this week, its worst weekly performance since mid-June, as fresh Covid-19 concerns triggered lockdown measures across Europe.

Investors “have every right to be worried about the coronavirus stock market rally, which is under a great threat. The airline, retail, and hospitality sectors are the ones to keep an eye on as investors continue to question their future,” Naeem Aslam, chief market analyst at AvaTrade, told MarketWatch.

France and Britain saw new records of daily COVID-19 infections on Thursday, while the Spanish government recommended a partial lockdown on all of the city of Madrid after the country tallied over 700,000 cases, the highest number in Western Europe, Reuters reports.

“This is the highest number recorded and a stark warning for us all. The signals are clear. Positivity rates are rising across all age groups and we’re continuing to see spikes in rates of admission to hospital and critical care,” Public Health England medical director Yvonne Doyle, said, according to CNN.

European banks were among the hardest hit, sliding to new lows, as investors turned away from the sector due to a number of factors, including lower global borrowing costs, rising bad loans due to the economic downturn, and money scandals.

“New restrictions in Europe, less fiscal support, fading liquidity impulse, and election risk should weigh on activity in Q4,” European equity strategists at Barclays wrote in a note. “Economic surprises are starting to roll over from all-time high levels.”

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