* European shares touch record high
* MSCI world index up 0.5%
* China will cut some U.S. import tariffs by half
* Record Wall Street highs lift mood
* Trade sensitive currencies up, bond yields down
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
(Updates price, adds comment)
By Tom Wilson
LONDON, Feb 6 (Reuters) - Stock markets across the world
rose on Thursday, buoyed by record highs on Wall Street and a
move by China to halve tariffs on some U.S. goods that
emboldened bets that the global economy would avoid long-term
damage from the coronavirus.
Momentum from Wall Street spilled into European markets from
Asia, gathering pace as investors assessed prospects for help to
the global economy from government stimulus and looser central
bank policy.
Europe's STOXX 600 .STOXX index gained 0.5% to a record
high, with a swathe of strong earnings reports helping. Indexes
in Frankfurt .GDAXI , Paris .FCHI and London .FTSE all made
solid gains, rising between 0.3% and 0.6%.
Italy's biggest bank UniCredit CRDI.MI rose 5.5% after it
posted a lower-than-expected fourth-quarter net loss.
China said on Thursday it would halve tariffs on some U.S.
goods, which could help improve negotiating conditions for a
second phase of a trade accord after the two countries signed
off on an interim deal last month. The move, which came after China's central bank eased policy
last weekend, helped MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS jumped 1.6%. Bluechip
Chinese shares gained 1.9% .CSI300 .
U.S. stock futures ESc1 rose 0.3%, while the MSCI world
equity index .MIWD00000PUS , which tracks shares in 49
countries, gained 0.4%.
Markets were already beginning to emerge from safe-haven
assets and bet on the virus being a short-term shock, even while
the human toll continues to grow.
"The market is looking through the near-term disruption to
activity and seeing potential for quite a sharp rebound later
this year on the back of even looser policy," said Tim Drayson,
head of economics at Legal & General Investment Management.
Evidence of appetite for riskier bets was apparent in
currencies, where China's onshore yuan CNY=CFXS climbed 0.1%
to its strongest level since Jan. 23 after the tariff cuts were
announced. The Australian dollar AUD=D3 also gained.
The safe haven Japanese yen slipped to a two-week low
against the dollar JPY= .
Bond yields also rose. The 10-year U.S. Treasuries yield
climbed to 1.672% US10YT=RR from a five-month low touched on
Friday. Euro zone bond yields told a similar story, with German
bund yields DE10YT=RR climbing to their highest in almost two
weeks.
Investors said that reflationary policies were supporting
equity markets.
"Over the last few weeks, central banks came in and said
they are ready to support the market whenever there is a
weakness," said Didier Anthamatten, a portfolio manager at
Unigestion. "Equity investors are basking in the ocean of
liquidity."
"SHORT-TERM SLUMP"?
Another 73 people on the Chinese mainland died on Wednesday
from the virus, the highest daily increase so far, bringing the
total death toll to 563, the country's health authority said on
Thursday. Statistics from China indicate that about 2% of people
infected with the new virus have died, suggesting it may be
deadlier than seasonal flu but less deadly than SARS, another
reason that investors remain relatively calm. Traders also cited vague rumours of a possible vaccine for
the coronavirus as a trigger for Wednesday's stock rally, even
though the World Health Organization has played down media
reports of "breakthrough" drugs. "The coronavirus is continuing to spread so we need to
remain cautious. But markets now appear to think that there will
be a quick economic recovery after a short-term slump," said
Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset
Management.
On Wall Street, the S&P 500 .SPX and Nasdaq .IXIC had
both reached record highs after jobs and service sector
indicators suggested the economy could continue to grow this
year even as consumer spending slows. Elsewhere, major currencies were largely quiet. The euro
stood flat at $1.0996 EUR= , while the dollar against a basket
of six major currencies .DXY slipped a fraction to 98.262.
Oil futures rose for a second day, boosted by potential
OPEC+ action to counter faltering demand after the coronavirus
outbreak and optimism on better prospects for U.S.-China trade
tensions .
Brent LCOC1 rose by 11 cents, or %0.2, to $55.38 a barrel
by late morning, having risen 2.4% in the last session. It is
down about 15% so far this year.
Copper, considered a good gauge on the health of the global
economy because of its wide industrial use, stablised somewhat
despite remaining on the back foot.
Shanghai copper SCFc1 extended its rebound into the third
day, rising 1.4% from 33-month low hit earlier this week.
For Reuters Live Markets blog on European and UK stock
markets, please click on: LIVE/
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