UPDATE 1-Bank stocks help European shares climb on Brexit day

(For a live blog on European stocks, type LIVE/ in an Eikon news window)

* Financials provide biggest boost to benchmark index

* Spain’s Caixabank falls, Banco Sabadell rises after results

* Novacyt surges on launching a new test for the coronavirus (Adds details, quote; updates prices)

By Medha Singh

Jan 31 (Reuters) – Bank stocks lifted European shares on Friday, with the United Kingdom officially set to end its 40-year membership of the EU, while broader sentiment was shaken after the WHO declared the coronavirus outbreak a global emergency.

The pan-European STOXX 600 rose 0.2%, but was still looking at its second straight weekly decline on concerns about the coronavirus epidemic in China, which has so far claimed more than 200 lives.

Investors also took heart that the World Health Organization (WHO) stopped short of travel and trade restrictions with China and said Beijing’s drastic actions would “reverse the tide”.

Travel and leisure as well as the mining companies, which were among the worst hit European subindexes this week, gained some ground.

Investors attention now turns to Brexit day, which comes three-and-a-half years after the United Kingdom first voted to leave the bloc.

However, analysts said it was not expected to move markets yet as Britain now moves into a transitory period and has time until the end of the year to negotiate a new trade and future relationship deal with the bloc.

“The EU and the UK have to negotiate the far-reaching free trade agreement but there’s only 11 months left for this. This is probably not enough time,” said Jörg Krämer, chief economist at Commerzbank AG.

“In the end I think that the British government will ask for more time to prevent a hard Brexit, but this is far from clear.”

The pound continued to firm a day after the Bank of England decided to hold off cutting interest rates. The sterling strength pressured the exporter-heavy FTSE 100 down 0.3%.

Meanwhile, earnings updates from Spanish lenders were mixed with Caixabank climbing 3.4% after its quarterly net profit more than doubled, while Banco Sabadell tumbled nearly 10% after the lender swung to a loss in the fourth quarter from a profit a year ago.

The banks index climbed 0.5%, helped by gains in Danske Bank A/S and Swedbank AB.

Home appliances maker Electrolux was among the worst performing stocks on the pan-regional index after it warned that the outbreak of the new coronavirus in China would impact its sourcing.

On the other hand, London-listed shares of healthcare company Novacyt shot up 25% after the company said that it had launched a new molecular test for the coronavirus. (Reporting by Medha Singh in Bengaluru; Editing by Bernard Orr)

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