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GLOBAL MARKETS-European shares scale record even as coronavirus shows no signs of peaking

Published 02/14/2020, 05:09 PM
Updated 02/14/2020, 05:16 PM
GLOBAL MARKETS-European shares scale record even as coronavirus shows no signs of peaking
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* Euro STOXX 600 hits record highs
* Scant consensus on market impact of coronavirus
* Hopes of government stimulus support shares globally
* Mainland China shares have recovered most of virus-caused
losses
* Euro falls to 3-year low ahead of GDP data
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic on coronavirus https://tmsnrt.rs/3aIRuz7

(Change byline, dateline; releads top, updates price
throughout)
By Tom Wilson and Hideyuki Sano
LONDON/TOKYO, Feb 14 (Reuters) - European shares touched
record highs on Friday as investors digested whether China's
coronavirus outbreak would cause long-lasting damage to global
economy.
Europe's broad Euro STOXX 600 .STOXX clawed up 0.1% to
follow Asian markets higher in choppy early trading, even as
indexes in Paris .FCHI and London .FTSE both fell 0.2%.
In both cases, corporate results weighed, with a 5% fall for
AstraZeneca AZN.L dragging London shares down as the drugmaker
said it would take a hit from the coronavirus outbreak.
France's Renault RENA.PA , meanwhile, fell 4.2% on its
first loss in 10 years as it set a lower operating margin goal
for 2020, a crunch year for its planned reboot alongside partner
Nissan after a scandal surrounding former boss Carlos Ghosn.
The virus outbreak showed no sign of peaking, with health
authorities reporting more than 5,000 new cases.
China's National Health Commission said it had recorded 121
new deaths on the mainland on Feb. 13, taking the accumulated
total infected to 63,851 people. Yet some investors are betting that the economic impact of
the outbreak will not be long-lasting, finding succour in a
spread beyond China that is not as rapid as feared.
Others have latched on to the possibility of further central
bank stimulus measures in response to any slowdown. China's
central bank, for example, has already pumped liquidity into its
economy.
Yet there is by no means a consensus that such a sunny take
is warranted. Some investors said they were dialing down bets on
equities amid the uncertainty over what economic toll the
coronavirus would take.
"We have actually taken some money out of equities this
week," said Rory McPherson, head of investment strategy at
Psigma Investment Management, adding that it was temporarily
holding cash instead.
"Markets have been overly focused on the good, and not
giving a balanced view on whether the stimulus from China isn't
effective, and if the coronavirus spreads and impacts the
economy more."
MSCI world equity index .MIWD00000PUS , which tracks shares
in 49 countries, was flat. Wall Street futures EScv1 were
pointing to a slighly higher open.
Earlier, Asian shares had earlier inched higher towards
their second straight week of gains, helped by hopes governments
will make provisions to soften the impact on their economies
from the coronavirus epidemic.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS ticked up 0.2% for weekly gain of 1.8%, while
China's blue-chip CSI300 shares .CSI300 rose 0.7%, having
staged a stunning recovery to claw back 95% of their losses made
after the outbreak.
"China is already easing its monetary policy and providing
more liquidity while more stimulus is likely. Factories are
starting to reopen albeit with some delays," said Yukino Yamada,
senior strategist at Daiwa Securities.

EURO BLUES
Currency traders had matters beyond the cornovairus on their
minds.
The euro EUR= slumped to to another near-three-year low,
with worries lingering about slowing growth in the euro zone and
rising political uncertainties in Germany.
The single currency has lost 1% so far this week and is on
track for its worst two-weekly performance since mid-2018, with
investors watching out for an estimate of how the economy
performed in the fourth quarter, due at 1000 GMT.
Euro zone GDP data due later on Friday is expected show a
sluggish growth of 0.1% from the previous quarter.
The euro fell to as low as $1.0827, and last stood flat at
$1.0830 EUR=EBS .
Others signalled growing demand for the U.S. dollar.
"Investors will surely avoid Asia for the time being and
will shift funds to the U.S., geographically the most separated
from the region," said Norihiro Fujito, chief investment
strategist at Mitsubishi UFJ Morgan Stanley Securities.
Against a basket of currencies, the dollar .DXY hit a
four-month high. It has risen 1.8% so far this month.
Oil edged higher and was on track for its first weekly gain
in six weeks, backed by expectations that producers will
implement deeper output cuts to offset slowing demand in China
caused by the coronavirus epidemic.
Brent crude futures LCOc1 were up 15 cents at $56.49 a
barrel. Brent is 3.7% higher for the week, the first increase
since the week of Jan. 3.
For Reuters Live Markets blog on European and UK stock
markets, please click on: LIVE/

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