GLOBAL MARKETS-Stocks fall on fears China virus to slow growth, gold gains

(Adds close of U.S. markets, paragraphs 11-18)
* Number of coronavirus cases in China rises
* Fear of virus curbing global growth offsets U.S. labor
data
* World stock markets post best week since June
* Oil weakens, government debt yields fall

By Herbert Lash
NEW YORK, Feb 7 (Reuters) - Global equity markets and
government debt yields slumped on Friday as nagging concerns
about the impact of the coronavirus on global growth
overshadowed a strong U.S. jobs report that indicated an economy
on pace to grow moderately.
Stocks on Wall Street retreated from record highs and
safe-havens gold and the Japanese yen rose as investors weighed
how much the virus is likely to disrupt supply chains. China
accounts for about one-third of global growth.
The better-than-expected U.S. labor report failed to move
the market as often occurs. Caution about the virus, which has
inflicted 31,211 people and left 637 dead, dictated investor
sentiment. Nonfarm payrolls increased by 225,000 jobs in January, with
employment at construction sites increasing by the most in a
year amid milder-than-normal temperatures, the Labor Department
said. "Investors should be watching the effect of the coronavirus
on the global supply chain and thus, on the global economy and
corporate profits," said John Vail, chief global strategist at
Nikko Asset Management.
While the amount and duration of the effect remains unknown,
there is a chance the Phase 1 U.S.-China trade deal will be
severely hampered and bilateral relations worsen again, he said.
Global supply chains have grown far more integrated, so
disruptions from China have bigger ripple effects around the
world, said Ron Temple, head of U.S. equity at Lazard Asset
Management in New York.
While the coronavirus will be disruptive, for long-term
investors it may pose an entry point into equities, Temple said.
The economy is doing fine, the U.S.-Sino trade spat is on
hold and there is no apparent catalyst for stock valuations to
fall, he said.
"At the same time you got interest rates that are really
low, so that feeds into an equity market with incremental
upside," Temple said.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.60%, moving away from highs this week that were shy of a
record peak set early in January. Despite Friday's downturn, the
index posted its best weekly gain since June.
Emerging market stocks lost 1.11% and the pan-European
FTSEurofirst 300 index .FTEU3 fell 0.25%. The blue-chip index
notched its best week since late 2016.
On Wall Street, the Dow Jones Industrial Average .DJI fell
277.26 points, or 0.94%, to 29,102.51. The S&P 500 .SPX lost
18.07 points, or 0.54%, to 3,327.71 and the Nasdaq Composite
.IXIC dropped 51.64 points, or 0.54%, to 9,520.51.
Gains for the Dow and S&P 500 were the best week since early
June. For the Nasdaq, it was the best week since November 2018.
Benchmark 10-year U.S. Treasury notes US10YT=RR last rose
18/32 in price to push yields down to 1.5834%.
Euro zone bond yields fell after German industrial output
data in December notched its biggest fall since January 2009,
fanning concerns about the bloc's biggest economy.
German industrial production tumbled 3.5% on the month,
exceeding expectations of a 0.2% fall. French industrial production fell more sharply than expected
in December as factories contended with nationwide transport
strikes and a broader European slowdown.
Germany's benchmark 10-year Bund DE10YT=RR yield fell as
low as -0.368%, before rising slightly.
The dollar slid and the yen rose after four days of selling,
spurred by investor hopes China can contain the virus.
The dollar index .DXY rose 0.19%, with the euro EUR=
down 0.32% to $1.0945.
The Japanese yen JPM= strengthened 0.21% versus the
greenback at 109.77 per dollar.
In Asian trade, the yen halted a slide that had it set for
its worst week in 18 months. FRX/
Oil prices slipped as Russia said it would need more time
before committing to output cuts along with the Organization of
the Petroleum Exporting Countries and other producers amid
falling demand for crude as China battles the coronavirus.
Brent crude LCOc1 futures fell 46 cents to settle down at
$54.47 a barrel, while U.S. West Texas Intermediate (WTI) crude
CLc1 futures slid 63 cents to settle at $50.32 a barrel.
U.S. gold futures GCv1 settled up 0.2% at $1,573.40 an
ounce.