GLOBAL MARKETS-Global shares, oil rally as lockdowns ease, vaccine hopes

(Adds U.S. market open; changes byline, dateline; previous
LONDON)
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Stocks rally on potential COVID-19 vaccine
* Oil surges as easing of lockdowns spurs recovery hopes
* Gold hits seven-year peak but eases on stock rally
* For Reuters Live Markets blog on stock markets, please
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By Herbert Lash
NEW YORK, May 18 (Reuters) - A gauge of global equity
markets surged more than 2% on Monday and oil rallied to highs
last seen in mid-April as data from a potential COVID-19 vaccine
trial lifted both sentiment and hopes of a faster recovery from
the coronavirus-driven economic slump.
Warm weather enticed much of the world to emerge from
coronavirus lockdowns as centers of the outbreak from New York
to Italy and Spain gradually lift restrictions that have kept
millions cooped up for months. Investors have cheered any positive development by
drugmakers' vaccine trials amid fears of a second wave of
infections as restrictions are eased.
Drugmaker Moderna Inc MRNA.O said its experimental
COVID-19 vaccine showed promising results in a small early stage
trial, leading its stock to jump 23.2%. A workable vaccine that can be mass-produced by year-end or
early 2021 would be a "game-changer" for industries whose
challenges may not be resolved by the economy's reopening, said
Rick Meckler, partner at Cherry Lane Investments, a family
investment office in New Vernon, New Jersey.
Global economic output will take two or three years to
recover to pre-pandemic levels, IHS Markit said in a note,
projecting worldwide GDP to fall 5.5% in 2020, or three times
the 2009 contraction after the global financial crisis.
Under the best of circumstances, it will be a long road for
the U.S. economy to recover, with additional job losses likely
through June, Federal Reserve Chairman Jerome Powell said in an
interview on Sunday. MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 2.79%, on track to its biggest rise in a month, while the
pan-European STOXX 600 index .STOXX rose 3.98%.
On Wall Street, the Dow Jones Industrial Average .DJI rose
821.57 points, or 3.47%, to 24,506.99. The S&P 500 .SPX gained
88.28 points, or 3.08%, to 2,951.98 and the Nasdaq Composite
.IXIC added 215.66 points, or 2.39%, to 9,230.22.
"The resilience of stock markets relative to the awful
economic data that we've been seeing over the past fortnight
speaks to an optimism that... as economies come out of lockdown
we can expect to see improvements as we head into the second
half of the year," said Michael Hewson, chief market analyst at
CMC Markets.
Japan's preliminary GDP data showed that the world's third-
biggest economy contracted an annualized 3.4% in the first
quarter, slipping into a recession for the first time in more
than five years. Hopes of a worldwide economic recovery lifted oil prices,
supported by output cuts. "Optimism on the demand side of the oil equation has helped
prices climb further, with gasoline demand coming back as
governments ease confinement measures," said Rystad Energy's
senior oil markets analyst Paola Rodriguez Masiu.
U.S. crude CLc1 recently rose 12.23% to $33.03 per barrel
and Brent LCOc1 was at $35.41, up 8.95% on the day.
The jump in oil prices lifted commodity currencies such as
the Norwegian crown and the Canadian dollar against the U.S.
dollar as optimism about a reopening of economies stifled by the
pandemic boosted risk appetite.
The dollar index =USD fell 0.529%, with the euro EUR= up
0.56% to $1.0876. The Japanese yen JPY= weakened 0.33% versus
the greenback at 107.41 per dollar.
The Norwegian crown was lifted by the rising oil prices, up
around 0.8% versus the euro EURNOK=D3 . Germany's 10-year bond yield declined to -0.495%
DE10YT=RR .
Benchmark 10-year U.S. Treasury notes US10YT=RR fell 21/32
in price to push their yield up to 0.7078%.
Gold pared gains from a seven-year peak earlier in the
session to trade slightly lower as hopes of a potential COVID-19
vaccine trial offset weak economic data and buoyed U.S.
equities.
Spot gold XAU= dropped 0.5% to $1,732.55 an ounce.

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