UPDATE 2-UK stocks slip as virus fears quell risk appetite

* FTSE 100, FTSE 250 down 0.4%

* New coronavirus cases tick up

* Daejan outshines market on buyout offer (Adds news items, updates to close)

By Shashwat Awasthi and Muvija M

Feb 21 (Reuters) – UK shares fell on Friday as investors took measures to reduce their exposure to perceived risky assets as the coronavirus continued to spread, while a buyout offer powered mid-cap real estate investment firm Daejan to an all-time high.

The FTSE 100 slipped 0.4% and marked its second consecutive week in the red after an uptick in new cases of the virus in China and South Korea hit stocks more exposed to commodity prices, including oil majors and miners.

“Perhaps the reality of the situation is starting to hit home for investors or maybe, and probably more likely, they’re using the slew of (company earnings) warnings to take some profit and risk off the table,” OANDA analyst Craig Erlam said.

The FTSE 250 was also 0.4% lower, but Daejan Holdings helped cap losses, gaining 55.7% to match its 8050 pence per share offer price.

The spread of the China-linked coronavirus, which has killed more than 2,200 people, dominated headlines again this week, keeping volatility elevated in global markets.

Data showed U.S. business activity in both the manufacturing and services sectors stalled in February with companies increasingly concerned about the epidemic.

Firms including tech giant Apple have warned of a hit to sales, leading market participants away from equities and into safe haven assets like gold.

Still, Erlam raised the possibility of a quick rebound as dealers look to buy into assets at a cheap price.

“This is a dip buying environment so it’s probably only a matter of time until investors pile back in on the ‘discount goods’,” he said.

In other moves, education group Pearson skidded 4% to the bottom of the blue-chip bourse after its annual profit came in slightly below its forecast.

Shares of Royal Mail fell 2.2% as the postal group’s largest labour union said it could call a strike as early as next month. (Reporting by Shashwat Awasthi in Bengaluru; Editing by Bernard Orr, Kirsten Donovan)