* U.S. stock futures hit limit-low
* Virus fears outweigh stimulus hopes
* U.S. yield curve steepens amid $1 trln stimulus talk
* U.S. crude oil futures tumble to 17-yr low
* Dollar in demand due to liquidity fears
By Karin Strohecker and Hideyuki Sano
LONDON/TOKYO, March 18 (Reuters) - Global stocks stumbled
back into the red on Wednesday with Wall Street futures pointing
to more losses ahead as fears over the coronavirus fallout
eclipsed large-scale support measures rolled out by policymakers
around the globe.
Some traditional safe-haven assets such as gold were also
under pressure as battered investors looked to unwind their
damaged positions.
Oil prices fell for a third session with U.S. crude futures
Clc1 tumbling to a 17-year low.
"Another remarkable day in what is clearly fin-de-regime,"
Rabobank's global strategist Michael Every wrote in a note.
"Things have already irrevocably changed and whipsaw market
action reflects that this is the case. The only issue is how
much further they change from here, and hence where markets
settle."
European equity markets suffered hefty losses with London
.FTSE and Frankfurt .GDAXI down 3.5% in early trade while
Paris .FCHI and Milan .FTMIB slipped around 3%.
The falls in Europe followed losses in Asia where MSCI's
broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS dropped 3.8% to lows last seen in summer 2016,
led by a 6.4% fall in Australia. Japan's Nikkei .N225 erased
early gains to dip 1.7%. MSCI's global stocks index dropped 1%
.MIWD00000PUS .
Losses were set to extend to Wall Street with U.S. stock
futures ESc1 indicating as much as 4% lower and hitting their
daily low limit just a day after the S&P 500 .SPX rose 6% and
Dow Jones rose 5.2% or 1,049 points. .N
"A rise of 1,000 points in Dow is something you see only
during a financial crisis. It is not a good sign," said Tomoaki
Shishido, senior fixed income strategist at Nomura Securities.
"A rise of 100 points would be much better for the economy."
Big price swings have left market participants nursing
losses, making them reluctant to jump back into the market and
thereby reducing trading volume.
Tuesday's Wall Street gains came as policymakers cobbled
together packages to counter the impact of the virus.
The Trump administration unveiled a $1 trillion stimulus
package that could deliver $1,000 cheques to Americans within
two weeks to buttress a virus-stricken economy. Britain launched a 330 billion pounds ($400 billion) rescue
package for businesses threatened with collapse while France,
which went into lockdown on Tuesday, is to pump 45 billion euros
($50 billion) of crisis measures into its economy to help
companies and workers. Still, forecasters at banks are projecting a steep economic
contraction in at least the second quarter as governments take
draconian measures to combat the virus, shutting restaurants,
closing schools and calling on people to stay home. Tuesday saw also the U.S. Federal Reserve step in again to
ease funding stress among corporates by reopening its Commercial
Paper Funding Facility to underwrite short-term corporate loans.
"While markets react to positive news on stimulus, that
doesn't last long. I think there are a lot of banks and
investors whose balance sheet was badly hit and they still have
lots of positions to sell," said Shin-ichiro Kadota, senior
currency and rates strategist at Barclays.
CORONA BONDS
In Europe, speculation grew around the issuance of joint
euro zone "coronavirus" bonds or a European guarantee fund to
help member states finance urgent health and economic policies.
That lifted high-grade euro zone government bonds yield, led
by Germany, where yields rose nine basis points to the highest
level in over a month at -0.342% DE10YT=RR . GVD/EU
Italian government bonds gained some respite after several
sessions of relentless selling, with yields falling between two
and six basis points across the curve. Benchmark U.S. 10-year Treasury yield edged up to a fresh
three week high of 1.2080 US10YT=RR after the Fed move eased
some market jitters, while U.S. 30-year bond yields climbed as
high as 1.8380% US30YT=RR .
In currency markets, the safe-haven yen gained sharply while
the dollar held onto hefty overnight gains against other
currencies. FRX/
The dollar slipped 0.1% against the yen to 107.53 yen JPY=
while the euro stood at $1.0971 EUR= . The dollar index against
a basket of currencies stood at 99.699, up 0.12% on the day.
Oil prices fell as the outlook for fuel demand darkened
with travel and social lockdowns triggered by the coronavirus
epidemic.
U.S. crude was down 84 cents, or 3.12%, at $26.11 a barrel
by 0822 GMT, having earlier fallen to $25.83 a barrel, the
lowest since May 2003. O/R
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Market selloff speed, severity eclipses previous dislocations
https://tmsnrt.rs/2x8mWri
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