GLOBAL MARKETS-Stocks drift as second wave virus fears mount

* European equities rally turns sour
* Investors fret over infections in U.S, Germany, China
* Australian dollar hit by weak jobs data
* Graphic: World FX rates http://tmsnrt.rs/2egbfVh

By Tom Arnold and Hideyuki Sano
LONDON/TOKYO, June 18 (Reuters) - Global stocks drifted on
Thursday as spiking coronavirus cases in some U.S. states and
China crushed hopes of a quick global economic comeback from the
pandemic.
Several U.S. states including Oklahoma, where President
Donald Trump plans a campaign rally on Saturday, reported a
surge in new coronavirus infections. The daily count of infections also hit a new benchmark in
California and Texas.
Around 400 workers tested positive for the virus at an
abattoir in northern Germany, prompting the closure of local
schools, while China's capital cancelled scores of flights and
blocked off some neighbourhoods. "We were worried about a second wave and you are seeing
worrying signs in some states in the US, some flare-ups in
Germany and China," Justin Onuekwusi, portfolio manager at Legal
& General Investment Management. "It's going to be a theme where
we see economies having to do mini-lockdowns and isolation
measures in order to contain the virus. The question is how much
it affects markets."
MSCI's broadest index of World shares .MIWD00000PUS was
0.1% lower, its second day of broadly flat trading. The
pan-European STOXX 600 .STOXX was 0.4% lower, as its rally
earlier in the week petered out.
S&P 500 mini futures EScv1 clawed back losses during Asian
trade to sit 0.2% down. China's blue-chip CSI300 shares
.CSI300 were a bright spot, adding 0.7%, helped by
reassurances from its central bank governor that the world's
second largest economy will maintain ample financial system
liquidity in the second half of the year as the economy recovers
from the coronavirus.
People's Bank of China Governor Yi Gang added, however, that
Beijing will need to consider withdrawing that support at some
point. U.S. Federal Reserve Chair Jerome Powell told lawmakers on
Wednesday that although the world's largest economy is beginning
to recover, with some 25 million Americans displaced from work
and the pandemic ongoing, it will need more help.
Some investors also worried about further paralysis in
Washington as Trump's former national security adviser John
Bolton accused him of sweeping misdeeds that included explicitly
seeking Chinese President Xi Jinping's help to win re-election.
Border tensions between North and South Korea, and between
India and China, also helped sour sentiment for risky assets.
Investors rushed to the safety of bonds, with the 10-year
U.S. Treasuries yield US10YT=RR falling 2 basis points to
0.710%.
"In the near-term, we have had a lot of risk-off factors
including Bolton and geopolitical tensions in Asia," said
Masahiko Loo, portfolio manager at AllianceBernstein in Tokyo.
"But on the other hand, risk assets are supported by ample
liquidity from central banks. I don't see that changing yet and
do not expect major sell-off in risk assets."
In currency markets, the safe-haven Japanese yen earlier
rose about 0.2% to 106.81 per dollar JPY= , while the U.S.
dollar also firmed against risk-sensitive currencies.
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The euro was also little changed against the greenback at
$1.1249 EUR=EBS .
The British pound traded in a narrow range before a Bank of
England meeting where policymakers are expected to expand
quantitative easing in the face of a weakening economy and tough
trade negotiations with the EU. The Australian dollar AUD=D4 fell 0.3% to $0.6864, hit by
worse than expected employment data.
The unemployment rate jumped to the highest in about two
decades in May as nearly a quarter of a million people lost
their jobs due to the coronavirus pandemic-driven shutdowns.
Oil prices recovered from losses earlier in the session,
with U.S. crude futures CLv1 down 0.2% to $38.13 per barrel,
while international benchmark Brent LCOc1 added 0.2% to $40.78
a barrel. O/R
The Organization of the Petroleum Exporting Countries and
its allies, or OPEC+, are expected to hold an online meeting
later on Thursday to discuss the future of a record 9.7 million
barrels per day output cut. In commodity markets, gold XAU= was stuck at $1,726.48
per ounce. /GOL

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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
S&P 500 market cap, daily moves https://tmsnrt.rs/2YCDodm
Asset performance vs outbreak https://tmsnrt.rs/2YF3T1T
Stocks and oil versus COVID-19 cases https://tmsnrt.rs/3cXWNdO
Asia stock markets https://tmsnrt.rs/2zpUAr4
Second wave in the United States https://tmsnrt.rs/2BmXZKv
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