(Adds U.S. market, byline; previous dateline LONDON)
* Dollar gains as Fed moves to bolster tight credit markets
* Gold jumps on efforts to add liquidity to markets
* Oil edged lower as demand weakens due to coronavirus
* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Tracking the coronavirus: https://tmsnrt.rs/3aIRuz7
By Herbert Lash
NEW YORK, March 17 (Reuters) - A gauge of global equity
markets and gold rose on Tuesday after the U.S. Federal Reserve
said it would buy short-term corporate debt directly from
companies to help relieve credit markets under strain by the
impact of coronavirus epidemic.
The renewal of the financial crisis-era Commercial Paper
Funding Facility, first used in 2008, will provide a backstop to
that market, a key funding source for a range of businesses for
which liquidity has dried up recently. The Fed said the Treasury would provide $10 billion of
credit protection to the central bank's commercial paper
operation.
Gold snapped a five-session decline on the funding effort
and stocks on Wall Street rose as the move eased growing fears
of a liquidity crunch due to the coronavirus.
While the funding backstop is important, it still does not
assist low-wage workers who get laid off during the closure of
restaurants, bars and other entertainment outlets, said David
Kelly, chief global strategist at JPMorgan Asset Management.
"The question is, are authorities doing all that they can to
soften the blow of the social distancing recession? I don't
think we're there yet," Kelly said.
A fiscal spending package is needed as "there's going to be
a lot of human misery out there," he added.
Equity markets in Europe rebounded and Wall Street climbed
on a series of announcements from the Fed, Treasury Department
and White House.
The pan-European STOXX 600 index .STOXX rose 2.26% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
1.92%.
On Wall Street, the Dow Jones Industrial Average .DJI rose
432.76 points, or 2.14%, to 20,621.28, the S&P 500 .SPX gained
75.37 points, or 3.16%, to 2,461.5 and the Nasdaq Composite
.IXIC added 222.14 points, or 3.22%, to 7,126.73.
The move to add liquidity to credit markets came as major
central banks and commercial counterparts joined forces to
alleviate broad shortages of dollar financing in global markets.
The Bank of Japan conducted an 84-day dollar funding
operation valued at $30.272 billion, its biggest injection of
dollar funds since 2008, and South Korea also pledged to act
soon. Before U.S. markets opened, equity and oil prices struggled
to shake off coronavirus fears after Wall Street's worst rout
since the Black Monday crash of 1987.
The Philippines became the first country to close its
markets, while France, Italy, Spain and Belgium curbed stock
trading by banning short-selling to shield some of Europe's
biggest companies from a sell-off. The moves will temporarily halt bets on falling shares at
scores of companies from the world's largest brewer
Anheuser-Busch InBev ABI.BR , to Spanish bank Santander
SAN.MC and Air France-KLM AIRF.PA .
The dollar surged as companies and investors sought out the
most liquid currency, and concerns about the coronavirus'
economic impact dented risk appetite.
Three-month euro/dollar cross-currency basis swap spreads
EURCBS3M=ICAP rose as high as 120 basis points from less than
90 on Monday, putting the spread as its widest since late 2011 -
the height of the euro zone debt crisis. "Stress here is helping lift the USD," said Shaun Osborne,
chief FX strategist at Scotiabank in Toronto.
An early rebound in European markets was wiped out as the
region's battered airline and travel stocks suffered a drubbing.
.EU .SXTP
Data showed German investor morale at lows last seen in the
2008 financial crisis, and rating agency S&P Global warned the
inevitable global recession this year would lead to a spike in
defaults. Brent crude fell below $30 a barrel to its lowest since 2016
as the pandemic hit oil demand while Saudi Arabia and Russia
kept up their battle for market share.
Brent crude LCOc1 futures fell 7 cents to $29.98 a barrel
and West Texas Intermediate crude CLc1 futures fell 5 cents to
$28.65 a barrel. It has slumped more than 50% since Jan. 2.
Markets stabilized earlier in Asia. Australian shares
.AXJO closed 5.9% higher, their biggest daily percentage gain
since October 2008, after plunging nearly 10% on Monday.
MSCI's broadest index of Asia-Pacific shares .MIAPJ0000PUS
and Japan's Nikkei .N225 both finished steady.
Some $2.7 trillion in market value was wiped from the S&P
500 on Monday as it suffered its third-largest daily percentage
decline on record. Over the past 18 days, the benchmark index
has lost $8.3 trillion. World stocks .MIWD00000PUS have
hemorrhaged over $15 trillion.
Group of Seven finance ministers are expected to hold a call
on Tuesday night, though markets want to see fiscal stimulus and
signs that the virus will not snowball out of control.
The dollar index =USD rose 1.616%, with the euro EUR=
down 1.91% to $1.0967.
The Japanese yen weakened 1.46% versus the greenback at
107.45 per dollar.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Coronavirus wipes $15 trillion off world stocks https://tmsnrt.rs/38S66tD
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>