* Euro STOXX 600 up 0.9%
* Wall Street futures up 0.7%
* Investors rotate to beaten-down sectors
* German Bund yields hit 2-month high
* Brent crude breaks $45 for first time since Sept
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Tom Wilson
LONDON, Nov 11 (Reuters) - Stocks gained and bonds dropped
on Wednesday as prospects of an effective COVID-19 vaccine
outweighed nagging worries over surging infections, fuelling a
rotation towards cut-price losers from the coronavirus pandemic
such as travel stocks.
The broad Euro STOXX 600 .STOXX climbed 0.9%, gaining
steam through the morning and building on a 5% rally this week
to hit its highest since early March.
Beaten-down equities were in demand, with travel-related
stocks .SXTP gaining 1.2%. Tech companies .SX8P , which like
their U.S. counterparts have surged since March's coronavirus
crash as lockdowns have pushed people to work and shop online,
turned positive after opening in the red.
Wall Street futures gauges also climbed, with S&P 500
futures ESc1 up 0.8%.
Bonds also adjusted to the prospect of a post-pandemic
world, with the yield on German Bunds DE10YT=RR , a benchmark
for euro zone sovereign debt, rising to their highest for two
months at -0.456%.
The yield on benchmark 10-year U.S. Treasuries US10YT=RR
posted on Tuesday its highest close since March, though U.S.
bond markets are shut on Wednesday. Bond yields rise when prices
fall.
"The market is not wrong -- we know who benefited during
COVID, and it was almost inevitable that if COVID comes to an
end, you would have a reversal on that," said Luca Paolini,
chief strategist at Pictet Asset Management.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in almost 50 countries, gained 0.2% to move close to its
record high touched on Monday.
Earlier, Asia-Pacific shares outside Japan .MIAPJ0000PUS
nudged up 0.2%, even as Chinese tech stocks .CSIINT fell
sharply over concerns about tighter regulation. VACCINATE, ROTATE
Investors have pivoted to riskier plays in equities, foreign
exchange and bonds after Pfizer Inc PFE.N said on Monday its
COVID-19 vaccine candidate, developed with BioNTech BNTX.O ,
showed a 90% success rate in preventing infection during trials.
Nearly $2 trillion changed hands on Monday alone, one of the
heaviest trading days since the height of the pandemic crisis.
Tech stocks, among the major winners in the pandemic, have lost
out, as have safe-haven currencies like the Japanese yen JPY= .
"You have seen a big rotation which highlighted how skewed
positioning was, as people sheltered in the work-from-home
plays," said Richard Saldanha, a portfolio manager at Aviva
Investors.
"For names geared towards so-called normalisation of
activity, (the rally) could continue to play out in coming
days."
Goldman Sachs lifted its 2020 S&P 500 .SPX target to 3,700
points as the vaccine news added momentum to a stock market
rally sparked by Joe Biden's U.S. election win. It sees the S&P
500 hitting 4,300 at year-end 2021, a fifth higher than
Tuesday's closing levels. Benchmark Brent oil rose to a more than two-month high above
$45 a barrel, fuelled by vaccine prospects and an industry
report showing U.S. crude inventories fell more than expected.
O/R
Brent futures LCOc1 were up $1.41, or 3.2%, at $45.02 --
the first time they have cleared the $45 threshold since early
September.
A rotation of sorts is also underway in fixed income
markets, as bonds in Japan, South Korea, Singapore and Thailand
fell while higher-yielding, riskier debt of countries like
Indonesia held gains.
In currency markets, Turkey's lira TRYTOM=D3 gained 3% to
pass 7.9 to the dollar as President Tayyip Erdogan said his
government was forming a new growth strategy, financed in part
by international investment. Sterling hit its highest level in more than two months
versus the euro GBP=D3 as traders bet a vaccine would boost
the UK economy. It was last flat at $1.3265.
The euro EUR= fell 0.3% to $1.1786 ahead of a speech from
European Central Bank President Christine Lagarde at 1300 GMT.
The dollar steadied against a basket of six major currencies
=USD and by late morning was up 0.2% at 92.927.
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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
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