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US STOCKS-China virus scare, disappointing earnings drive Wall St lower

By Sruthi Shankar

* Dow component Travelers slumps after results

* China virus scare hits travel, casino stocks

* Airlines mixed after Southwest, American Airlines earnings

* Indexes slide: Dow 0.64%, S&P 0.43%, Nasdaq 0.22% (Changes comment, updates prices)

By Sruthi Shankar

Jan 23 (Reuters) - U.S. stock indexes fell on Thursday, as mounting worries over a coronavirus outbreak in China, disappointing corporate earnings and weakness in financial stocks prompted investors to hit the brakes after a strong start to the year.

China put on lockdown two cities at the epicentre of the outbreak that has killed 17 people and infected nearly 600 amid fears the transmission rate will accelerate as hundreds of millions of Chinese travel for the Lunar New Year holidays.

Fears of the fast-spreading coronavirus hitting the global economy have knocked world stock markets off record highs this week, even as U.S. earnings reports so far have mostly been in line with expectations.

"There is some fear that it appears to be spreading, and certainly there are some fears about what it's going to do to the Chinese economic growth," said Scott Ladner, chief investment officer at Horizon Investments.

"People are generally trading off the assumption of a very bad outcome."

At 11:53 a.m. ET, the Dow Jones Industrial Average was down 0.64% at 29,000.53. The S&P 500 fell 0.43% to 3,307.34 and the Nasdaq Composite dropped 0.22% to 9,363.16.

After taking a hit earlier this week on worries about travel demand, airline stocks were mixed, with Southwest Airlines Co gaining 1.5% and American Airlines Group Inc falling 0.7% following quarterly earnings.

Casino and hotel operators including Wynn Resorts Ltd , Melco Resorts & Entertainment Ltd and Las Vegas Sands Corp, which draw a large portion of their revenue from China, were down between 1.7% and 4.2%.

Financial stocks were among the biggest decliners with a 1.1% drop. Insurer Travelers Cos Inc slid 5.1% after its executives discussed a challenging tort lawsuit environment and said losses from those cases "have come in worse than our expectations".

Analysts expect earnings at S&P 500 companies to have dropped 0.7% in the fourth quarter versus a 0.3% drop estimated at the start of 2019, according to Refinitiv IBES data.

Apparel maker VF Corp slumped 8.9% after cutting its full-year earnings forecasts on weak demand for its Timberland brand.

Declining issues outnumbered advancers for a 1.96-to-1 ratio on the NYSE and a 1.98-to-1 ratio on the Nasdaq.

The S&P index recorded 35 new 52-week highs and three new lows, while the Nasdaq recorded 61 new highs and 39 new lows. (Reporting by Sruthi Shankar and Ambar Warrick in Bengaluru; Editing by Shounak Dasgupta)