GLOBAL MARKETS-Stocks, euro rise on massive EU stimulus plan

* European shares advance to 11-week highs
* Hong Kong, China shares hit by new protests
* Yuan falls to lowest since September
* Brent crude futures slip 1.5%
* World FX rates in 2019: http://tmsnrt.rs/2egbfVh

By Tom Arnold and Hideyuki Sano
LONDON/TOKYO, May 27 (Reuters) - World shares surged on
Wednesday as reports of a European Union rescue fund helped
offset concerns about unrest in Hong Kong over Beijing's
proposed national security laws.
The European Commission proposed a package worth in total
1.85 trillion euros for the EU's next long-term budget and a
recovery fund for economies hammered by the coronavirus
pandemic. News of the plan helped underpin a broad market rally in
Europe.
The euro EUR= jumped to trade at 1.1022 against the
dollar, up from 1.0932, while the STOXX 600 .STOXX extended
gains, rising 0.7% to reach its highest level since March 10.
Yields of Italian, Spanish and Portuguese sovereign debt fell to
multi-week lows.
MSCI's index of the world's 49 stock markets .MIWD00000PUS
gained 0.3%, close to the two-and-a-half-month highs reached on
Tuesday on hopes of economic recovery in the developed world as
countries ease social restrictions after the COVID-19 crisis.
But concerns about U.S.-China tensions over Hong Kong helped
keep a dampener on stronger gains.
Riot police fired pepper pellets on protesters in Hong
Kong's main business district, rekindling concern about the
unrest seen last year that hit the territory's economy.
MSCI's ex-Japan Asia-Pacific index .MIAPJ0000PUS fell 0.4%
as Hong Kong and mainland China shares extended declines.
Hong Kong's Hang Seng .HSI fell 1.0% and mainland shares
.CSI300 were down 0.8%, amid fears the protests would worsen
antagonism between the United States and China.
Oil prices fell amid the U.S.-China friction and concern
over how quickly fuel demand will recover as lockdowns ease.
Brent crude LCOc1 futures dropped 1.6% to $35.60. U.S. West
Texas Intermediate crude futures CLc1 were down 1.2%, at
$33.95 a barrel. O/R
E-Mini futures for the S&P 500 ESc1 rose 1.2% to their
highest point since March 6. The index had cleared 3,000 points
in Wall Street overnight before earlier pulling back, as some
traders returned to the New York Stock Exchange floor for the
first time in two months. But China remained in focus after U.S. President Donald
Trump said on Tuesday that he was preparing to take action
against Beijing this week over its effort to impose national
security laws on Hong Kong. Worsening relations between the world's two biggest
economies could further hobble global business activity, which
is already under pressure from the coronavirus pandemic.
The dollar, measured against a basket of currencies, edged
down 0.2% to 98.788 =USD . The Chinese yuan weakened to the lowest levels since early
September in both onshore and offshore trade. The onshore
renminbi slipped 0.3 to as low as 7.1595 per dollar CNY=CFXS ;
the offshore currency fell 0.4% to 7.1760 per dollar CNH= .
Anticipation of the EU recovery plan lifted Southern
European bonds.
Italy's 10-year bond yield fell to a seven-week low at 1.48%
IT10YT=RR , while Spain and Portugal's 10-year govt bond yields
ES10YT=RR , PT10YT=RR fell to eight-week lows.
U.S. Treasury yields rose, with 10-year yields US10YT=RR
at 0.687%, up about 4 basis points from Tuesday.
Gold prices XAU= dropped to a two-week low, before paring
some losses to trade down 0.1% to $1,79.00 per ounce. GOL/

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(Editing by Larry King and Mark Heinrich)