GLOBAL MARKETS-Dollar rules; ECB stimulus boosts bonds

* Dollar surges
* ECB launches 750 bln euro asset purchase program
* Euro STOXX 600 adds 1.2%
* Euro zone bond yields fall
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

(Rewrites, updates price, adds comment)
By Tom Wilson and Tom Westbrook
LONDON/SINGAPORE, March 19 (Reuters) - The dollar surged on
Thursday as extraordinary steps by central banks across the
world to cope with a coronavirus-induced financial rout had
mixed success.
The dollar gained against the British pound GBP=D3 to its
highest since 1985, last up 0.8% at $1.1535, as investors rushed
to secure liquidity.
Against a basket of six major currencies =USD the dollar
gained 0.6%, near a more-than-three-year high touched a day
earlier.
Bond markets recovered after the European Central Bank
pledged late on Wednesday to buy 750 billion euros ($820
billion) in sovereign debt through 2020. That brought the ECB's
planned purchases for this year to 1.1 trillion euro, with the
new purchases alone worth 6% of the euro zone's GDP. L8N2BBACD
Sovereign bond yields in Italy and across the euro zone
dropped after the ECB's emergency measures, and European stocks
arrested their rout.
"The announcement (the ECB) has made has gone some way to
comforting markets that borrowing costs in those economies won't
be allowed to spiral higher," said Mike Bell, global market
strategist at J.P. Morgan Asset Management.
Europe's broad Euro STOXX 600 .STOXX eked out a 1.2% gain
in early trading, with most indexes in Frankfurt .GDAXI up a
1.5% and Paris .FCHI climbing 3.3%. London's FTSE .FTSE
added 0.6%.
Equities remained shaky elsewhere as the dollar rose. MSCI's
broadest index of Asia-Pacific shares outside Japan slumped by
4% slump .MIAPJ0000PUS . Korea and Taiwan led the losses as the
index plunged to a four-year low, with circuit breakers
triggered in Seoul, Jakarta and Manila. .SO
MSCI's world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was down 0.2%.
Wall Street futures were pointing to gains of 0.1%. EScv1 .
ITALIAN YIELDS FALL
Italy, which has seen its borrowing costs jump in recent
days, led the drop in yields after the ECB move. Its two-year
bond yields slumped by than 100 basis points to 0.41%
IT2YT=RR , heading for its biggest one-day fall since 1996.
Italy's 10-year bond yields slid as much as 90 bps to 1.40%
IT10YT=RR .
The gap over safer German Bund yields tightened almost 100
bps from Wednesday's closing levels and were set for the biggest
daily drop since the 2011 euro one crisis.
Markets elsewhere failed to respond to central bank action.
Before the ECB move, the U.S. Federal Reserve promised a
liquidity facility for money market mutual funds and the Bank of
Japan made two unscheduled bond purchases totalling 1.3 trillion
yen ($12 billion). The Australian central bank
slashed interest rates to a record low of 0.25%.
Traders reported huge strains in bond markets, however, as
distressed funds sold any liquid asset to cover losses in stocks
and redemptions from investors. Benchmark 10-year sovereign bond yields in New Zealand,
Malaysia, Korea and Singapore and Thailand surged as prices
tumbled, and U.S. 10 year Treasuries US10YT=RR rose 10 basis
points through the session.
"Not only central banks, but governments are throwing
everything at the economy right now, but markets aren't
responding" said Luca Paolini, chief strategist Pictet Asset
Management.
Commodities fell as the virus outbreak worsened. The
pandemic has killed almost 9,000 people globally, infected more
than 218,000 and prompted widespread emergency lockdowns.
Gold XAU= fell 1% before regaining some of those losses.
Copper hit its down-limit in Shanghai. GOL/ MET/L
Oil steadied after an overnight plunge to an 18-year low in
Asian trade. Brent LCOc1 was up $2.14 to $27.02. O/R
J.P. Morgan economists forecast the U.S. economy will shrink
14% in the next quarter and the Chinese economy will drop more
than 40% on an annualised basis in the current one. "There is no longer doubt that the longest global expansion
on record will end this quarter," they said in a note. "The key
outlook issue now is gauging the depth and the duration of the
2020 recession."
For Reuters Live Markets blog on European and UK stock
markets, please click on: LIVE/

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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Equities and bonds total return https://tmsnrt.rs/3deypWu
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