Germany and France prepare for new lockdowns as COVID sweeps Europe

People should reduce contacts outside their immediate household to "the absolute minimum necessary"

BERLIN/PARIS (Reuters) - Germany announced plans to shut down large swathes of public life for a month on Wednesday while France prepared to tighten controls further as COVID surged across Europe and financial markets tumbled at the likely cost of a second lockdown.

German Chancellor Angela Merkel met state premiers in a video conference and agreed a partial lockdown that will see bars, restaurants, cinemas, sports facilities and trade fairs closing from Nov. 2 to Nov. 30.

"November will be a month of truth. The increasing numbers of infections are forcing us to take tough countermeasures in order to break the second wave," Finance Minister Olaf Scholz said on Twitter after the meeting.

People should reduce contacts outside their immediate household to "the absolute minimum necessary" and policing measures to enforce the rules will be stepped up. However schools and many businesses will continue to operate and shops are allowed to remain open on condition they set strict social distancing limits.

In France, which has seen more than 50,000 new cases a day, President Emmanuel Macron will give a televised address in the evening and is expected to announce further restrictions following curfew measures introduced across much of the country last week.

News television BFM TV reported that the government was considering a month-long lockdown from midnight on Thursday, but there was no confirmation from Macron s office.

The measures in Germany and France, following similar moves in Italy and Spain would be less severe than the near-total lockdowns imposed at the start of the crisis in March and April.

But, despite government pledges to help businesses affected by the new measures, the economic cost is likely to be heavy, wiping out the fragile signs of recovery seen over the summer and raising the prospect of a double-dip recession.

European stock markets hit their lowest levels since June on Wednesday while the euro fell against the dollar and the Cboe Volatility Index .VIX, known as Wall Street s "fear gauge", surged to its highest level in nearly two months.

To help soften the impact, Scholz is expected to make available up to 10 billion euros ($11.82 billion) in aid and step up government borrowing while Italy has set aside more than 5 billion euros.

While leaders have been desperate to avoid the crippling cost of lockdowns, the new restrictions reflect mounting alarm at the galloping pace of the pandemic from Spain, France and Germany to Russia, Poland and Bulgaria.

"If we wait until the intensive care units are full, it will be too late," said German Health Minister Jens Spahn, whose country has already taken in patients from its neighbour the Netherlands, where hospitals have reached their limits.

Russian Deputy Prime Minister Tatiana Golikova said on Wednesday that hospital beds were at 90% of capacity in 16 regions of the country, while officials have warned that even well-equipped health systems like those in France and Switzerland could reach breaking point within days.

VACCINE HOPES DENTED

Hopes that new treatments might curb the spread were dented when the head of Britain s vaccine procurement task force said that a fully effective vaccine may never be developed and that early versions were likely to be imperfect.

The European Commission called on European governments to step up their response and coordinate testing strategies and said there was still time to hold back the disease.

"The situation is very serious, but we can still slow down the spread of the virus if everybody takes responsibility," Commission President Ursula von der Leyen told a news conference.

The latest figures from the World Health Organization on Tuesday showed Europe reported 1.3 million new cases in the past seven days, nearly half the 2.9 million reported worldwide, with over 11,700 deaths, a 37% jump over the previous week.

The United States, which saw more than 500,000 cases over the past week, has seen record daily infections and, while many countries in Asia have largely brought the disease under control, China reported 42 new cases on Tuesday, its highest daily toll in more than two months.

With less than a week of voting left before the Nov. 3 election, U.S. President Donald Trump pushed ahead on Wednesday with mass rallies despite the surge in COVID cases and mounting criticism that he is prioritising his re-election above the health of his supporters.

So far, more than 42 million cases and more than 1.1 million deaths have been recorded worldwide from the virus, which was first identified in the central Chinese city of Wuhan at the end of last year.

While surveys in several countries show many want strict controls to halt the spread of the disease, the broad climate of public support for governments seen in the first wave of the pandemic has increasingly evaporated.

Governments across Europe have been under fire for a lack of coordination and for failing to use a lull in cases over the summer to bolster defences, leaving hospitals unprepared and forcing people on to packed public transport to get to work.

Since the weekend, Italy has seen repeated clashes between police and protesters in cities from Naples to Turin as well as bitter criticism from restaurant owners and business groups.

"At 6 p.m. public transport is often crowded. You take the risk because you have to get to work. You wear a mask, you take hand gel with you," Elio Venafro said after getting off a bus in central Rome on Wednesday. "It s the new normal."