GLOBAL MARKETS-Stocks hit two-week lows, oil slides on virus surge

* European stocks down 0.1% in choppy trade
* Asia ex-Japan skids from 4-mth top; S&P 500 futures rise
* Deaths from COVID-19 reached half a million on Sunday
* Bonds supported on safe haven appeal, oil slips

By Thyagaraju Adinarayan
LONDON, June 29 (Reuters) - World shares hit two-week lows
and oil fell nearly 2% on Monday as the relentless spread of the
coronavirus curbed optimism on the global economy, prompting
investors to take shelter in safe-haven bonds and gold.
European stocks .STOXX opened slightly lower, after Asian
shares ended deep in the red playing catch up with Wall Street's
ugly close on Friday as some U.S. states reconsidered their
reopening plans.
The global death toll from COVID-19 reached half a million
people on Sunday, with one quarter of those in the United
States, where cases have surged in a handful of southern and
western states. MSCI's world shares index .MIWD00000PUS was off 0.2%,
hitting its lowest level since June 15 dragged down by Japan's
Nikkei .N225 shedding 2.2% and Chinese blue chips .CSI300
off 0.9%. E-Mini futures for the S&P 500 ESc1 were up 0.1%.
"The market is caught in a real battle between recovery
optimism and news of increasing cases in certain geographical
areas such as the U.S," said John Woolfitt, director of trading
at Atlantic Capital Markets.
"I think this battle will remain until the U.S. get a handle
on it."
Sovereign bonds benefited from the shift to safety with
yields on U.S. 10-year notes US10YT=RR near 0.64%, having
briefly been as high as 0.96% early in June. German government
bond yields clung to one-month lows on Monday. DE10YT=RR
The U.S. dollar has generally gone in the opposite
direction, rising to 97.334 against a basket of currencies
=USD from a trough of 95.714 earlier in the month.
It had less luck on Monday, easing back to 107.18 yen
JPY= , though it remained well within the recent range of
106.06 to 107.63. The euro stood at $1.1245 EUR= having found
solid support around $1.1167. USD/
"Financial markets remain extremely fragile, having to weigh
worsening virus news against improving economic data," said
Marija Veitmane, senior strategist at State Street Global
Markets.
It is an important week for U.S. data with the ISM
manufacturing index on Wednesday and payrolls on Thursday, ahead
of the Independence Day holiday. Federal Reserve Chair Jerome
Powell is also testifying on Tuesday.
"U.S. economic data will reinforce that the economy is
through the worst of the recession in our view," said CBA
currency analyst Joseph Capurso.
"But a double-dip recession is possible if widespread
restrictions are reimposed, leading to a surge in the dollar."
In commodity markets, gold held near its highest since early
2012 at $1,773 an ounce XAU= . GOL/
Oil prices slipped amid concerns the pandemic would slow the
reopening of some economies and thus hurt demand for fuel. O/R
Brent crude LCOc1 futures fell 69 cents to $40.33 a
barrel, while U.S. crude CLc1 lost 62 cents to $37.87.

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