GLOBAL MARKETS-Shares reach 10-week high, S&P 500 eyeing 3000

* Europe gains as travel stocks jump nearly 6%
* Nikkei rises 2.2% to highest since early March
* S&P 500 futures climb 1.8% to clear 3,000 hurdle
* China central bank says to strengthen economic policy
* Oil gains as supply falls, U.S. rigs hit all-time low
* World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Marc Jones and Wayne Cole
LONDON/SYDNEY, May 26 (Reuters) - World shares forged ahead
on Tuesday and commodity markets drove higher as well, as
investors disregarded Sino-U.S. tensions to focus on more
stimulus in China and a re-opening world economy.
Britain's FTSE .FTSE and Japan's Nikkei .N225 led their
regions with 2.2% gains, while U.S. S&P 500 futures ESc1
cleared the 3,000 level for the first time since early March,
when the economic impact of the coronavirus was just becoming
clear. .EU .N .T
Europe's early spurt saw the STOXX 600 .STOXX score a near
11-week high. Travel and leisure stocks jumped almost 6% .SXTP
after Spain had said quarantine-free tourism would resume next
month and Germany edged towards a 9 billion-euro
bailout of airline Lufthansa. Italian, Spanish and other southern euro zone government
bonds gained GVD/EUR and a weaker dollar helped the euro, the
pound, and holiday-hotspot currencies like Turkey's lira /FRX
"Investors are trying to be optimistic here and think that
everything is going to be OK," said Christopher Peel, the chief
investment officer of Tavistock Wealth. "You can't fight it ...
I'm not trying to fight it. But it is totally disconnected from
economic reality."
Overnight saw another high-profile casualty of coronavirus
as Latin America's largest airline, LATAM Airlines Group
LTM.SN and its affiliates in Chile, Peru, Colombia, Ecuador
filed for bankruptcy protection in the United States. The car-
rental firm Hertz HTZ.N had done the same on Friday.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS had advanced 1.7% overnight.
South Korea .KS11 closed up 1.75% and Chinese blue chips
.CSI300 ended 1.1% higher after the country's central bank
said it would strengthen economic policy and continue to push to
lower interest rates on loans. While largely reiterations of past comments, they helped
offset the war of words between Washington and Beijing over
trade, the coronavirus and China's proposals for stricter
security laws in Hong Kong. "U.S.-China tensions continue to simmer in the background,
but equity investors appear more interested on the prospect of
economies reopening around the globe," said Rodrigo Catril, a
senior FX strategist at NAB.
"On this score, Japan ended its nationwide state of
emergency, Spaniards have returned to bars in Madrid wearing
masks and England will re-open some businesses on June 1."
In addition, Germany wants to end a travel warning for
tourist trips to 31 European countries from June 15 if the
coronavirus situation allows, the news agency dpa reported.
Bond investors suspect economies will still need massive
amounts of central bank support long after they re-open and that
is keeping yields low even as governments borrow much more.
Yields on U.S. 10-year notes US10YT=RR were trading at
0.67% after rising to 0.68% last week, when the market absorbed
a wave of new issuance.
The decline in U.S. yields might have weighed on the dollar
but with rates everywhere near or less than zero, major
currencies have been holding to tight ranges.
The dollar was up against the yen at 107.80 JPY= , still
within the 105.97 to 108.08 band that has lasted since the start
of May. The euro gained to $1.0939 EUR= , having spent the
month so far between $1.0765 and $1.1017.
Against a basket of currencies the dollar was 0.2% lower at
99.620 =USD , but still sandwiched between support at 99.001
and resistance around 100.560.
Analysts at CBA felt the dollar could break higher should
China-U.S. tensions actually threaten their trade deal.
"Although not our central scenario, if the U.S. or China
were to withdraw from the Phase One deal, USD would sharply
appreciate while CNH, AUD and NZD would decline," they wrote in
a note to clients.
In commodity markets, gold edged up 0.2% to $1,733 an ounce
XAU= . GOL/
Oil prices were supported by falling supplies as OPEC cut
production and the number of U.S. and Canadian rigs dropped to
record lows for the third week running. O/R
Brent crude LCOc1 futures rose 71 cents to $36.24 a
barrel. U.S. crude CLc1 gained $1.14 to $34.39.

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