* U.S. stock futures down 3% in Asia after NY bounce
* Stimulus hopes outweighed by concerns about epidemic
* U.S yield curve steepens on $1 trln stimulus talk
* Dollar in demand due to liquidity fears
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano
TOKYO, March 18 (Reuters) - U.S. stock futures and several
Asian shares fell in choppy trade on Wednesday, as worries about
the coronavirus pandemic eclipsed hopes broad policy support
would combat the economic fallout of the outbreak.
Most traditional safe-haven assets were also under pressure
as battered investors looked to unwind their damaged positions,
leading to wide discrepancies between various markets.
In Asia, MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS dipped 0.3%, led by a 4.9% fall in
Australia while Japan's Nikkei .N225 gained 1.6%.
U.S. stock futures ESc1 fell 3% in Asia, a day after the
S&P 500 .SPX rose 6% and Dow Jones rose 5.2% or 1,049 points.
"A rise of 1,000 points in Dow is something you see only
during a financial crisis. It is not a good sign," said Tomoaki
Shishido, senior fixed income strategist at Nomura Securities.
"A rise of 100 points would much better for the economy."
Wild swings in markets imply the capacity of various
players, from speculators to brokerages, to absorb risks has
been tormented, analysts say.
The increase in the S&P 500 futures the previous day, still
down more than 10% so far this week, came as policymakers
cobbled together packages to counter the impact of the virus.
The Trump administration on Tuesday unveiled a $1 trillion
stimulus package that could deliver $1,000 cheques to Americans
within two weeks to buttress an economy hit by coronavirus while
many other governments look to fiscal stimulus. "That would be bigger than a $787 billion package the Obama
administration came up with after the Lehman crisis, so in terms
of size it is quite big," said Masahiro Ichikawa, senior
strategist at Sumitomo Mitsui Asset Management.
"Yet stock markets will likely remain capped by worries
about the spreading coronavirus," he said.
Britain unveiled a 330 billion pounds ($400 billion) rescue
package for businesses threatened with collapse while France is
to pump 45 billion euros ($50 billion) of crisis measures into
its economy to help companies and workers.
Still, forecasters at banks are projecting a steep economic
contraction in at least the second quarter as governments take
draconian measures to combat the virus, shutting restaurants,
closing schools and calling on people to stay home. The U.S. Federal Reserve stepped in again on Tuesday to ease
funding stress among corporates by reopening its Commercial
Paper Funding Facility to underwrite short-term corporate loans.
"While markets react to positive news on stimulus, that
doesn't last long. I think there are a lot of banks and
investors whose balance sheet was badly hit and they still have
lots of positions to sell," said Shin-ichiro Kadota, senior
currency and rates strategist at Barclays.
BOND AND CURRENCIES
The damage to markets was apparent in bond markets as well.
U.S. Treasuries extended their losses, driving the benchmark
10-year yield to 1.009% US10YT=RR . It hit a two-week high of
1.105% in the previous day, rising more than 30 basis points.
"The staggering thing is, bonds have fallen even as the Fed
has been buying 40 billion dollars of bonds every day. That far
outpaces the Fed's previous episodes of quantitative easing and
shows just how much selling pressure there is now," said
Nomura's Shishido.
Some market players said talk of big stimulus is raising
concerns about the long-term outlook of U.S. fiscal health,
putting pressure on long-term U.S. government bonds.
The spread between 30-year and five-year yields rose to
almost 1%, the highest since September 2017.
The U.S. 30-year bonds yield jumped 38 basis points on
Tuesday to 1.648% US30YT=RR .
In the currency market, a shortage of dollar cash supported
the U.S. currency.
The Australian dollar bounced back to $0.6008 AUD=D4 after
having hit a 17-year low of low of $0.5958 the previous day.
The kiwi recovered to $0.5955 NZD=D4 after hitting a
11-year trough of $0.5919. FRX/
The dollar held firm against most currencies but dipped
0.25% against the safe-haven yen to 107.28 yen JPY= .
The euro was steady at $1.1004 EUR= .
U.S. benchmark oil futures CLc1 sank to near their 2016
trough of around $26 per barrel on prospects of slow demand and
a Saudi-instigated price war. O/R
(Editing by Jane Wardell and Himani Sarkar)