GLOBAL MARKETS-Coronavirus douses stocks rally; Europe, U.S. futures lower

* European stocks snap three-day winning streak
* Nikkei edges up 0.9%; investors still cautious
* Wall Street futures fall after Wednesday's rally
* Coronavirus still causing deaths, economic dislocation
* Dollar steadies, U.S. yields again dip below 1%

By Karin Strohecker
LONDON, March 5 (Reuters) - European shares fell again on
Thursday, taking their cue from U.S. equity futures, which
implied a lower open for Wall Street as cases of the coronavirus
surged in the U.S.
European markets snapped a three-day winning streak.
Frankfurt .GDAXI and Paris .FCHI fell 0.3% and Milan
.FTMIB , which is at the heart of Europe's coronavirus
outbreak, and London .FTSE slipped 0.5% as evidence mounted of
the damage the coronavirus outbreak was inflicting.
Futures for U.S. stocks pointed to more pain ahead. E-Minis
for the S&P 500 ESc1 fell 0.6% after California declared a
state of emergency as coronavirus cases increased.
"European stocks are now catching with the downward trend,
dragged by a wave of profit warnings," said Stephane Ekolo
global equity strategist at TFS Derivatives. "U.S. futures are
down due to fears the situation could worsen after California
declared a state-wide emergency."
Europe's losses came after MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.7% for
a fourth day of gains. The Dow .DJI and S&P 500 .SPX surged
more than 5% and the Nasdaq .IXIC nearly matched their gains
.N .
U.S. stocks soared after the U.S. House of Representatives
approved an $8.3 billion funding bill to combat the spread of
the coronavirus. The emergency legislation followed a surprise
rate cut by the U.S. Federal Reserve on Tuesday. Wall Street also seemed to find relief in Joe Biden's
performance in the campaign for the Democratic presidential
nomination. Biden is considered less likely to raise taxes and
impose new regulations than rival Bernie Sanders. The coronavirus epidemic showed no signs of slowing, with
deaths mounting globally.
"There is little doubt that the COVID-19 outbreak will slow
global growth considerably this quarter, and we expect it to
actually produce a rare non-recessionary contraction in GDP,"
said JPMorgan economist Joseph Lupton.
He noted the bank's all-industry PMI measure of activity for
February slumped 6.1 points, the largest one-month drop on
record, and at 46.1 was at its lowest since May 2009.
The Federal Reserve and Bank of Canada have both responded
by cutting interest rates by 50 basis points. Markets in the
euro zone are pricing in a 90% chance that the European Central
Bank will cut its deposit rate, now minus 0.50%, by 10 basis
points next week.
"We have to get past the threshold where COVID-19 shifts
from panic to headline exhaustion and subsequent news on it
becomes more and more of a fade," Tom Porcelli, chief U.S.
economist at RBC Capital Markets. "Then risk assets can move
higher in earnest."
Ten-year Treasury yields fell below 1% again US10YT=RR
before recovering. Yields had fallen for 10 straight days, the
longest slide in at least a generation.
The dollar held steady, with the euro dropping back to
$1.1137 EUR= from a two-month high of $1.1212 earlier in the
week.
The dollar stood at 107.28 yen JPY= , up from a five-month
low of 106.84. The dollar index held steady at 97.329 =USD .
USD/
Gold steadied after jumping when the Fed cut rates. It was
last at $1,638.97 per ounce XAU= . GOL/
Oil gained before an OPEC meeting where Saudi Arabia is
expected to push the group and its allies, including Russia, to
cut output further. Brent crude LCOc1 futures stood at $51.44
a barrel; U.S. crude CLc1 at $47.03. O/R

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