* Dollar slides vs yen, gains on commodity currencies
* Europe opens down 6%, Wall Street futures hit down limit
* ASX 200 plunges almost 10%, Nikkei drops 2%
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones and Wayne Cole
LONDON/SYDNEY, March 16 (Reuters) - Stock markets were
routed and the dollar stumbled on Monday after the Federal
Reserve slashed U.S. interest rates in an emergency move and its
major peers offered cheap U.S. dollars in a bid to prevent
global lending markets seizing up.
The drastic manoeuvres were aimed at cushioning the economic
impact as the breakneck spread of the coronavirus all but shut
down more countries, but they had limited success in calming
panicky investors.
Europe, which has become the epicentre of the outbreak, saw
its main stock markets plunge nearly 8% in brutal opening trade
.EU . Earlier, Wall Street futures for the S&P 500 index ESc1
had hit their down-limit in the first 15 minutes of Asian
trading as investors rushed for safety.
"The central banks threw the kitchen sink at it yesterday
evening yet here we are (with deep falls in stock markets),"
said Societe Generale strategist Kit Juckes.
"There is a great sense that central banks are going to get
to grips with the issues of getting money flowing ... But the
human problem, the macro problem, there is nothing they can do
about that."
The Fed's emergency 100 basis point rate cut on Sunday was
followed on Monday by further policy easing from the Bank of
Japan in the form of a pledge to ramp up purchases of
exchange-traded funds and other risky assets.
New Zealand's central bank also shocked by cutting rates 75
basis points to 0.25%, while the Reserve Bank of Australia (RBA)
pumped more money into its financial system. South Korea cut
rates and Russia rushed together a $4 billion anti-crisis fund.
Japanese Prime Minister Shinzo Abe said G7 leaders would
hold a teleconference at 1400 GMT to discuss the crisis.
MSCI's index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS tumbled 4% to lows not seen since early 2017,
while the Nikkei .N225 fell 2% as the BoJ's easing steps
failed to reassure markets.
Chinese data underscored just how much economic damage the
disease has already done to the world's second-largest economy,
with official numbers showing the worst drops in activity on
record. Industrial output plunged 13.5% and retail sales 20.5%.
In Asia, Shanghai blue chips .CSI300 fell 3% overnight
even as China's central bank surprised with a fresh round of
liquidity injections into the financial system. Hong Kong's Hang
Seng index .HSI tumbled 3.4%.
Australia's S&P/ASX 200 .AXJO plunged, finishing down 9.7%
-- its steepest fall since the 1987 crash. "By any historical standard, the scale and scope of these
actions was extraordinary," said Nathan Sheets, chief economist
at PGIM Fixed Income, who helps manage $1.3 trillion in assets.
"This is dramatic action and truly does represent a bazooka.
"Even so, markets were expecting extraordinary action, so it
remains to be seen whether the announcement will meaningfully
shift market sentiment."
Sheets emphasised investors wanted to see a lot more U.S.
fiscal stimulus and evidence the Trump administration was
responding vigorously and effectively to the public health
challenges posed by the crisis.
"The performance of the economy and the markets will be
mainly determined by the severity and duration of the virus
outbreak," he said.
UNDER STRAIN
Markets have been severely strained as bankers, companies
and individual investors stampede into cash and safe-haven
assets while selling profitable positions to raise money to
cover losses in savaged equities. To ease the dislocation, the Fed cut interest rates by a
full percentage point on Sunday to a target range of 0% to
0.25%, its second cut this month, and promised to expand its
balance sheet by at least $700 billion in coming weeks.
Five of its peers also joined up to offer cheap U.S. dollar
funding for financial institutions facing stress in credit
markets. U.S. President Donald Trump, who has been haranguing the Fed
to ease policy, called the move "terrific" and "very good news".
"It may be a shot in the arm for risk assets and help to
address liquidity concerns ... however, it also raises the
question of whether the Fed has anything left in the tank should
the spread of the virus not be contained," said Kerry Craig,
global market strategist at J.P. Morgan Asset Management.
"We really need to see the fiscal side ... to prevent a
longer than needed economic slowdown."
The Fed's rate cut combined with the promise of more
bond-buying pushed U.S. 10-year Treasury yields down sharply, to
0.68% US10YT=RR from 0.95% late on Friday.
It was a different story in Europe, where Southern European
bond yields jumped to multi-month highs as investors continued
to worry about the rapid spread of the virus there.
Spanish and Portuguese 10-year bond yields rose to 9-1/2
month highs at 0.74% and 0.93% respectively, up as much as 13
basis points on the day ES10YT=RR PT10YT=RR .
French 10-year yields also soared as much as 14 basis points
to 3-1/2 month highs at 0.14% FR10YT=RR , while Italian 10-year
yields were up 17 basis points at 1.98% IT10YT=RR .
"The momentum we've seen in the periphery is largely to do
with the sentiment towards debt metrics in countries which after
many, many years of quantitative easing and existing central
bank support within the euro zone, are going into another fairly
significant if not larger crisis than the one before," said
Rabobank strategist Matt Cairns.
The fall in U.S. Treasury yields had pressured the dollar
early on Monday, though it regained some ground later on. It was
last down 1.6% on the Japanese yen at 106.37 JPY= . The euro
was up almost 1% at $1.1212 EUR= .
The commodity-exposed Australian dollar fell as much as 0.3%
to $0.6166 AUD=D3 while the New Zealand dollar NZD=D3
slipped 0.2% to $0.6044.
Oil, already reeling from a price war, fell further on
concerns about the impact of coronavirus on global demand. Brent
crude LCOc1 was last off $2.21, or 6.5% at $31.64 per barrel
while U.S. crude slipped $1.64 to $30.94 a barrel. O/R
Gold rallied 0.8% to $1,541.34 XAU= .
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Coronavirus pummels markets https://tmsnrt.rs/2IPoKIb
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