(adds detail, background, S&P comment)
LONDON, March 17 (Reuters) - The cost of insuring low-grade European debt against default climbed further on Tuesday, flirting with recent eight-year highs as the fallout from the coronavirus spread and containment measures kept pressure on riskier assets.
The iTraxx Europe crossover index of credit default swaps (CDS), which measures the cost of insuring exposure to a basket of sub-investment grade European companies, jumped 17 bps from Monday's close to 626 bps, data from IHS Markit showed.
The index has risen sharply from record lows of just over 200 bps it hit in January.
Fears have been escalating in recent days over the fallout companies could face as the coronavirus pandemic plays havoc with the global economy.
Ratings agency S&P Global warned on Tuesday that the sudden economic stop caused by measures to contain the virus will cause a global recession this year. It predicted default rates for non-financial corporates in Europe would surge to the high single digits over the next 12 months.
A cashflow slump and much tighter financing conditions as well as the simultaneous oil price shock will hurt creditworthiness, S&P added.
Pressure on the iTraxx Europe subordinated financials index nevertheless eased a touch, with the index falling 3 bps to 304 bps after hitting its highest level since 2013 on Monday.
Among sovereigns, five-year CDS for the United Kingdom added 2 bps to 39 bps, levels last seen in July 2016 after the shock Brexit vote.
Austria CDS added 1 bps to 22 bps, while levels for Germany , Japan and the U.S. held steady. (Reporting by Karin Strohecker; Editing by Dhara Ranasinghe and Catherine Evans)