* Prospects of central bank stimulus lift global shares
* ECB says stands ready to take targeted measures
* G7 conference call planned later on Tuesday
* Australia cuts rates to shake off virus fears
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Anshuman Daga and Hideyuki Sano
SINGAPORE/TOKYO, March 3 (Reuters) - Global stocks and oil
prices extended gains on Tuesday as policymakers indicated their
willingness to help ease the economic fallout from the
coronavirus, while worries about the outcome of a call by Group
of Seven heads kept a lid on gains.
Finance ministers from the group and central bank governors
will hold a conference call on Tuesday (1200GMT) to discuss
measures to deal with the outbreak. But according to a source at
the group, a statement it is crafting does not detail any fiscal
or monetary steps. The decision to hold a call came after the European Central
Bank on Monday joined the chorus of central banks signalling a
readiness to deal with the threat from the outbreak. "This is a tug of war between hope and fear. Central banks
are giving hopes with their potential stimulus but we haven't
seen any firepower yet," said Vasu Menon, senior investment
strategist at OCBC Bank Wealth Management.
"The question is what they will do? Monetary policy is
already very loose and interest rates are very low," he said.
Earlier messages from the U.S. Federal Reserve that it was
prepared to act weighed on the greenback.
The improved sentiment helped U.S. S&P 500 futures ESc1
climb up as much as 1% in Asian trade on Tuesday but they
trimmed gains to 0.1% following news on the G7 draft statement.
European stock futures indicated a strong open for European
markets. Euro Stoxx 50 futures STXEc1 and German DAX futures
FDXc1 both added 0.8% while FTSE futures FFIc1 were up 0.7%.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS advanced 0.7%, paring the day's gains but still
marking the second straight session of rises.
"Barring any further deterioration of the coronavirus
outbreak, we believe that the global cyclical recovery is likely
to gain further momentum," Schroders' Asian multi-asset team
said in a report.
"This is likely to benefit stocks with higher leverage to
global growth, as stronger earnings could support dividend
growth."
MONEY MARKETS
Japan's Nikkei .N225 lost steam and closed 1.2% lower
after short-covering ran its course and as the yen firmed on the
dollar, but South Korea's Kospi .KS11 rose 0.4%.
Australian shares .AXJO ended down 0.7%, with bank shares
easing after the central bank cut interest rates to a record low
of 0.5%, the fourth reduction in less than a year. The rout in global stocks last week had already prompted Fed
Chair Jerome Powell and Bank of Japan Governor Haruhiko Kuroda
to flag a readiness to move.
Money markets are fully pricing in a cut of at least 0.25
percentage point to the current 1.50%-1.75% target rate at the
Fed's March 17-18 meeting as well as a 0.10 percentage point cut
to the ECB's key rate at March 12 meeting.
The frantic moves by policymakers reflected growing fears
that the disruption to supply chains, factory output and global
travel caused by the new epidemic could deal a serious blow to a
world economy trying to recover from the U.S.-China trade war.
Coronavirus is now spreading much more rapidly outside China
than within the country, leading the world into uncharted
territory, although the World Health Organization has so far
stopped short of calling it a pandemic. RATE CUTS
The rebound in global stock prices saw U.S. bond yields roll
back some of their sharp falls.
The 10-year U.S. Treasuries yield retreated to
1.1174% US10YT=RR from a record low of 1.030% marked on Monday.
The rate-sensitive two-year notes yield US2YT=RR jumped back
to 0.8452% from Monday's 3 1/2-year low of 0.710%.
April Fed funds rate futures FFJ0 still price in about 80%
chance of a 0.50 percentage point cut this month and a total of
almost 1 percentage point cuts by the end of year.
Expectations of Fed rate cuts prompted investors to cut
their exposure to the dollar.
Against the yen, the dollar lost 0.5% to 107.8 yen JPY= ,
slipping towards a five-month low of 107 set on Monday.
The euro was a shade higher at $1.1146 EUR= , having hit an
eight-week peak of $1.1185 in the previous session.
The Australian dollar AUD=D3 sat above a recent 11-year
trough largely on short covering after the cut in interest
rates. Oil prices gained, although they came off day's highs, after
a jump of more than 4% on Monday. U.S. West Texas Intermediate
crude futures CLc1 rose 1.4% to $47.4 a barrel. Brent crude
LCOc1 was up 1.16 % to $52.43. O/R