* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* MSCI ACWI up 1.5%
* Europe's STOXX 600 jumps 5% at open
* Dollar eases from three-year highs
By Ritvik Carvalho
LONDON, March 20 (Reuters) - Stock markets rebounded from
some of their recent huge losses on Friday, pulling further away
from three-year lows as central banks and governments pledged
masses of cash to reduce the economic impact of the coronavirus
pandemic.
Shares soared at the start of trading in Europe, with the
pan-European STOXX 600 index jumping nearly 5%. .EU
Britain's FTSE .FTSE rose 4%, Germany's DAX .GDAXI
gained 6%, and France's CAC 40 .FCHI gained 5.86%. Spanish
stocks were up 3.8% .IBEX and Italian stocks gained 3%.
.FTSEMIB
MSCI's All-Country World Index .MIWD00000PUS , which tracks
stocks across 49 countries, was up 1.5 %.
But in an indication of the deep damage inflicted on global
equities from the pandemic so far, the index remains set to
finish nearly 9% lower this week, adding to last week's 11.1%
plunge.
U.S. S&P 500 e-mini stock futures ESc1 also pointed to a
brighter end to the week, adding 3.5%.
As the spread of the coronavirus brought much of the world
to a halt, nations have poured ever-more massive amounts of
stimulus into their economies while central banks have flooded
markets with cheap dollars to ease funding strains. The U.S. Senate was debating a $1 trillion-plus package that
would include direct financial help for Americans, relief for
small businesses and steps to stabilise the economy. Sources told Reuters that China was set to unleash trillions
of yuan of fiscal stimulus to revive an economy facing its first
contraction in four decades, though on Friday the country
surprised markets by keeping its lending benchmark unchanged.
"Markets, in our view, will ultimately settle down if three
conditions are met: 1) visibility on the ultimate scale of the
coronavirus outbreak and evidence the infection rate as peaked
over the long term; 2) deployment of credible and coordinated
policy packages; and 3) confidence that financial markets are
functioning properly," asset manager BlackRock said in a note.
It said it was neutral on risk assets and advised investors
to take a long-term perspective as "significant value is being
created on riskier assets."
In currency trading, the dollar lost some steam after
hitting more-than three-year highs this week as investors dumped
many assets in favour of the world's reserve currency.
The dollar's surge is a nightmare for the many countries and
companies that have borrowed heavily in the U.S. currency,
leading to yet more selling of emerging market currencies in a
negative feedback loop.
"The speed and aggression with which authorities are
wheeling out measures to cushion the economic fallout from the
virus and sowing the seeds for a hopefully rapid recovery, has
resonated somewhat in equity markets," said Ray Attrill, head of
FX strategy at NAB.
"Yet there is little doubt that funds need to buy dollars to
rebalance hedges in light of the 30% fall in equity markets so
far this month," he added. "The dollar remains the pre-eminent
safe-haven asset during times of extreme market stress."
For now, investors in Asia were merely happy Wall Street had
not plunged again. South Korean shares .KS11 bounced 7.4%,
though that still left them down more than 11% for the week.
Australia's beleaguered market .AXJO eked out a 0.70%
gain, and futures for Japan's Nikkei .N225 were trading up at
17,710, compared with the cash close of 16,552.
OIL RELIEF
Aiding sentiment was a rally in oil prices overnight. U.S.
crude CLc1 was 7% higher at $27 a barrel on Friday, up from a
low of around $20, while Brent crude LCOc1 stood at $30. O/R
This was a major relief as the collapse of crude prices had
blown a huge hole in the budgets of many oil producers and
forced them to dump any liquid asset to raise cash, with U.S.
Treasuries a particular casualty.
After climbing more than 100 basis points in nine sessions,
U.S. 10-year Treasuries US10YT=RR steadied around 1.0501%.
At the same time, funds across the world were fleeing to the
liquidity of U.S. dollars, lifting it to peaks not seen since
January 2017 against a basket of its peers =USD .
"Such price action suggests significant market stress,
particularly on the wide range of entities outside the U.S. that
have borrowed in dollars," said Richard Franulovich, head of FX
strategy at Westpac.
"It could last until global capital flows and investor risk
appetite normalises, possibly months away."
The euro rose 0.85% to $1.0781 EUR= but was not far off
three-year lows, having shed more than 3% for the week so far -
the steepest decline since mid-2015.
Sterling continued its wild swings with a blistering 3%
rally to $1.1878 GBP= , having earlier hit its lowest since
1985 around $1.1404. It was still down 3% for the week.
The jump in the dollar has made gold more expensive in other
currencies. While it rallied on Friday to $1,503.78 per ounce,
it remains down about 1.6% on the week. XAU= GOL/