* Investors question speed of stock rally
* Oil prices extend gains to 2-1/2 month high
* Dollar snaps four-day losing streak
* Bond markets digest glut of supply
By Marc Jones
LONDON, May 21 (Reuters) - Equity markets slipped on
Thursday on concerns about the long-term impact of the new
coronavirus and simmering U.S.-China tensions, though those
worries couldn't stop oil prices from marching to a 2-1/2 month
high.
The London .FTSE , Frankfurt .GDAX and Paris .FCHI
bourses and Wall Street futures were all 0.7%-1% lower in early
trading, while the euro EUR= and pound GBP= both wilted as
the dollar snapped a four-day losing streak. /FRX
It was also a big day for data and central bankers.
Purchasing manager index surveys (PMIs) from Germany and France
had already confirmed that economic activity has begun to
return, though they were far from stellar.
Despite better-than-expected euro zone-wide figures
Germany's improvement undershot analysts'
forecasts, and it was the third month in a row that the surveys
were firmly in economic contraction territory. "While we have seen resilience in European markets there is
still caution, and we can't seem to get over the peaks (in
equity markets) that we saw at the end of last month," said CMC
Markets' senior analyst Michael Hewson.
"We have got PMIs improving but you would expect that
because lockdowns are being eased. They are still rubbish, they
are just less rubbish than they were in April."
Italy and Spain's government borrowing costs also rose
slightly as bond market investors waited for bond sales from
both and for more details on a proposed 500 billion euro ($550
billion) EU coronavirus recovery fund.
The Franco-German driven plan would push the bloc in the
direction of joint financing but has been met with resistance
from a number of other northern European countries who want the
aid to be in the form of loans to be repaid rather than grants.
The 10-year BTP yield was up 1.1 basis points at 1.64%
IT10YT=RR , not far from the 1.59% low it touched on Tuesday,
while Spanish yields rose 2.4 bps at 0.73% ES10YT=RR
OIL ON THE BOIL
U.S. weekly jobless claims are seen coming in later at a
seasonally adjusted 2.4 million, according to a Reuters survey
of economists - high but well off the record 6.867 million seen
at the end of March.
There will also be a raft of U.S. Federal Reserve speakers,
including Fed chair Powell, and two big emerging market central
banks – Turkey and South Africa - are expected to cut their
interest rates again.
In Asia overnight, Japan's Nikkei stock index .N225 slid
0.2% after data there showed the country's exports collapsed
21.9% in April. Another dismal trade report came
from Korea where 20-day exports declined by 20.3% year-on-year
and imports fell by 16.9%, though Korean stocks still ended the
day higher. .T .SS
Shares in China .CSI300 had ended down 0.2% after more
sparring with Washington over the coronavirus and Hong Kong and
Taiwan emerged Friday's annual National People's
Congress (NPC) meeting was also looming after a 2-1/2 month
delay due to COVID-19. The focus will be on Premier Li Keqiang's 2020 work report
where he is expected to announce key economic targets and
details on fiscal stimulus plans.
In the currency markets, the dollar climbed to $1.0956 per
euro EUR=EBS and rose to $1.2291 against the British pound
GBP=D3 . The greenback also gained against the Australian
AUD=D3 and New Zealand dollars NZD=D3 , reflecting the
cautious mood of the markets.
No such issues in the oil world though, where U.S. crude
CLc1 rose 1.9% to $34.09 a barrel and Brent LCOc1 jumped
1.8% to $36.39 per barrel. Both are now at the highest since
early March on hopes that demand for fuel will see a robust
global pick up.
U.S. crude inventories USOILC=ECI fell by 5 million
barrels last week, against expectations in a Reuters poll for a
1.2 million-barrel rise, Energy Information Administration (EIA)
data had showed.
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FACTBOX-Global economic policy response to the coronavirus
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