GLOBAL MARKETS-Stocks gain after China cuts U.S. import tariffs, virus fears wane

* Upbeat U.S. private job, service sector data lift mood
* WHO says no break-through reported on coronavirus drugs
* China will cut some U.S. import tariffs by half
* Mainland China shares up 1%
* European stock futures up about 0.6%
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Hideyuki Sano
TOKYO, Feb 6 (Reuters) - Global stocks extended their
recovery on Thursday, cheered by record closes in Wall Street
benchmarks following encouraging economic data, and after China
announced a cut in tariffs on some imported goods from the
United States.
The tarriff relief added to hopes the global economy may be
able to avoid a major shock from China's rapidly-spreading
coronavirus, which has battered financial markets in recent
weeks.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS jumped 1.66% while Japan's Nikkei .N225 rose
2.38%. Mainland Chinese shares also reacted positively, with the
bluechip CSI300 index .CSI300 up 1.97%.
European stocks are expected to enjoy a rally, with
pan-European Euro Stoxx 50 futures STXEc1 up 0.66%, German DAX
futures FDXc1 adding 0.73% and FTSE futures FFIc1 gaining
0.63%.
U.S. stock futures ESc1 rose 0.55% in Asia while China's
onshore yuan CNY=CFXS rose 0.2% to its strongest level since
Jan. 23 after the tariff cuts were announced.
China said on Thursday it will halve tariffs on some U.S.
goods, which could help improve negotiating conditions for a
second phase of trade deal after the two countries signed off on
a interim deal last month. "Under the phase 1 deal, China has to meet a tough target to
increase U.S. import by $100 billion this year, so a measure
like this was necessary and expected," said Tomo-o Kinoshita,
global market strategist at Invesco Asset Management.
"But at the same time, that they did this now points to
their desire to support Chinese companies as the coronavirus
epidemic will obviously deal a huge blow to China's growth," he
added.
Mainland shares have also drawn support from Beijing's
efforts to support the market amid heightened anxieties about
the coronavirus, including liquidity injections and de facto
restrictions on selling. "It is difficult for investors to sell Chinese shares now
given the authorities' stance is very clear," said Naoki
Tashiro, president of TS China Research.
"Still, until the spread of the virus stops, market
stabilisation steps won't completely change investor
psychology."
On Wall Street, far from the epicentre of the outbreak, the
mood was brighter as the S&P 500 .SPX gained 1.13% to a record
close of 3,334.69 while the Nasdaq Composite .IXIC added 0.43%
to 9,508.68, also a record high.
The ADP National Employment Report showed private payrolls
jumped 291,000 jobs in January, the most since May 2015, while a
separate report showed U.S. services sector activity picked up
last month. Both indicators suggest the economy could continue
to grow this year even as consumer spending slows.
Traders also cited vague rumours of a possible vaccine or a
drug breakthrough for the coronavirus as a trigger for
Wednesday's stock rally, although they said such catalysts were
likely to simply be an excuse for short-covering. The World Health Organization also played down media reports
on Wednesday of "breakthrough" drugs being discovered to treat
those infected with the virus. Another 73 people on the Chinese mainland died on Wednesday
from the virus, the highest daily increase so far, bringing the
total death toll to 563, the country's health authority said on
Thursday. "Despite all the efforts by the Communist Party, the virus
is becoming a major global disaster. Considering workers usually
start to return to hometown about a week before the Lunar New
Year, many patients must have left Wuhan before its lockdown on
Jan. 23," TS China Research's Tashiro said.
Statistics from China indicate that about 2% of people
infected with the new virus have died, suggesting it may be
deadlier than seasonal flu but less deadly than SARS, another
reason investors remained relatively calm. "The coronavirus is continuing to spread so we need to
remain cautious. But markets now appear to think that there will
be a quick economic recovery after a short-term slump," said
Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset
Management.
The 10-year U.S. Treasuries yield rose back to 1.672%
US10YT=RR from a five-month low of 1.503% set last Friday.
In the currency market, the yuan gained 0.2% to 6.9600 per
dollar in onshore trade CNY=CFXS while the Australian dollar
rose 0.2% to $0.6758 AUD=D4 .
The safe-haven yen stepped back to 109.94 yen JPY= ,
compared with a three-week high of 108.305 hit on Friday.
The euro stood flat at $1.0998 EUR= .
In commodities, U.S. West Texas Intermediate (WTI) crude
CLc1 gained 2.66% to $52.10 per barrel, extending its rebound
from a 13-month low of $49.31 touched on Tuesday.
Still it is down about 15% so far this year.
Copper, considered a good gauge on the health of the global
economy because of its wide industrial use, showed some signs of
stabilisation although it remained depressed overall.
Shanghai copper SCFc1 extended its rebound into the third
day, rising 1% from 33-month low hit earlier this week. It is
about 5% below its levels just before the start of Lunar New
Year holidays.
"One has to wonder whether China can meet its trade
agreement with the U.S. to increase imports by $200 billion (in
two years), which looked very difficult to begin with," said a
manager at a U.S. asset management firm, who declined to be
named because he is not authorised to speak about China.
"Before the outbreak, a mini goldilocks market was
everyone's consensus. But we have to see whether we need to
change such a view," he added.

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(Editing by Sam Holmes & Shri Navaratnam)