* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* S&P E-mini futures up 0.3%
* MSCI All Country World down 0.34%
* European shares slump after attempted recovery
* Short-lived relief in stocks
By Ritvik Carvalho
LONDON, Feb 25 (Reuters) - Global stocks sank to their
lowest levels in over two months on Tuesday, as relief from a
sharp selloff the previous day on fears about the spreading
coronavirus proved temporary.
European shares recorded their worst one-day loss since June
2016 on Monday as worries about the spread of the new virus far
beyond China whacked global markets and risk sentiment.
On Tuesday, the pan-European STOXX 600 index initially rose
0.6% in London .STOXX .EU but was down 0.3% by early
afternoon. Italian shares lost 0.3%, adding to their earlier
losses .FTMIB . Italy is grappling with the worst outbreak of
coronavirus in Europe.
More than 80,000 people have been infected in China since
the outbreak began, apparently in an illegal wildlife market in
the central city of Wuhan late last year.
China's death toll was 2,663 by the end of Monday, up 71
from the previous day. But the World Health Organization (WHO)
has said the epidemic in China peaked between Jan. 23 and Feb. 2
and has been declining since. "In spite of increased uncertainty in Europe, signs remain
good that China is succeeding in containing the outbreak there,"
said Mark Haefele, chief investment officer at UBS Global Wealth
Management.
"The number of new cases in China ex-Hubei are now at very
low levels, which should allow economic activity to normalize
and supply chain disruption to begin to resolve itself, in line
with our base case."
MSCI's All Country World index .MIWD00000PUS , which tracks
shares across 47 countries, was down 0.33% by 1237 GMT. The
index suffered its biggest daily drop in two years on Monday.
Southern Europe's bond markets, which earlier showed signs
of stabilising, gave way to fresh selling of not just Italian
bonds, but also Greek, Spanish and Portuguese debt. GVD/EUR
E-Mini futures for the S&P 500 ESc1 , which earlier bounced
0.7%, pared some of those gains to trade only 0.3% higher. .N
In Asia earlier, South Korea's hard-hit market .KS11 eked
out a 0.6% rise and helped MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS fight back to flat.
Japan's Nikkei .N225 was down 3.4%, catching up with the
global sell-off after having been shut on Monday, while Shanghai
blue chips .CSI300 eased 1.6%.
European and U.S. stocks have suffered their biggest loses
since mid-2016 amid fears the coronavirus may be morphing into a
pandemic that could cripple global supply chains and wreak far
greater economic damage than first thought.
The risks are such that bond markets are starting to bet
central banks will have to ride to the rescue with new stimulus.
Futures for the Federal Reserve funds rate 0#FF: have
surged in the last few days to price in a 50-50 chance of a
quarter-point rate cut as early as April. In all, they imply
more than 50 basis points of reductions by year end.
Central banks across Asia have already been easing policy,
while governments have promised large injections of fiscal
stimulus, something western countries might also have to
consider.
Data showing sales of smartphones in China tumbled by more
than a third in January, underlining the potential economic
impact of the virus, helped knock Apple Inc AAPL.O shares 3.5%
lower on Monday. BET ON RATE CUTS
The coronavirus death toll climbed to seven in Italy on
Monday and several Middle East countries were dealing with their
first infections, feeding worries about a pandemic. The rush to bonds left yields on 10-year U.S. Treasury notes
US10YT=RR at 1.39%, down almost 20 basis points in just three
sessions and paying less than overnight rates. Yields are
rapidly approaching the all-time low of 1.321% hit in July 2016.
The sharp drop, combined with the fact the Fed has far more
room to cut interest rates than its peers, kept the U.S. dollar
restrained after a run of strong gains.
"Besides a tapering in the geographical spread of the
coronavirus or unexpected improvements in key short-term macro
indicators, the circuit breaker for these market moves is
starting to move towards the U.S. central bank," Danske Bank
said in a note to clients.
In currencies, the fell 0.2% to reach $1.0835 EUR= , while
the dollar lost 0.1% to trade at 110.61 yen JPY= , away from a
10-month top of 112.21. USD/
Against a basket of currencies, the greenback traded flat
=USD .
Gold ran into profit-taking after hitting a seven-year peak
overnight, and was last down 0.7% at $1,649.26 an ounce XAU= .
GOL/
Oil steadied after shedding nearly 4% on Monday. U.S. crude
CLc1 was down 0.43% at $51.23, while Brent crude LCOc1 also
lost 0.43% to $56.06. O/R
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Global stocks' performance vs. reported coronavirus cases https://tmsnrt.rs/3c3WvTr
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