* European stocks tumble, Italy down more than 5% after
virus
spread
* 30-year Treasury yields set record low
* Gold prices surge to highest since 2013
(Updates prices, changes comments, dateline, byline)
By Rodrigo Campos
NEW YORK, Feb 24 (Reuters) - Stocks across the globe posted
their largest decline in over two years on Monday and oil prices
tumbled 5% as a jump in coronavirus cases outside of China sent
investors scrambling to the security of gold and government
bonds on fears of the impact to the global economy.
Spot gold prices XAU= rose for a fifth session and to a
7-year high while the U.S. 30-year Treasury bond yield
US30YT=RR set a record low.
Despite the spike in coronavirus cases reported in Italy,
South Korea and Iran, the head of the World Health Organization
said that "using the word 'pandemic' now does not fit the facts
but may certainly cause fear."
"We must focus on containment while preparing for a
potential pandemic," Tedros Adhanom Ghebreyesus told reporters
in Geneva, adding that the world was not witnessing an
uncontained spread or large-scale deaths. Concerns over the hit to economic growth and uncertainty
over the stress to supply chains triggered selling in stocks and
other high-risk assets.
"It is not as though the numbers have changed dramatically;
but what has changed is the geography, which adds a new level of
concern," said Art Hogan, chief market strategist at National
Securities in New York.
"What the market is trying to predict here is 'How large
will this get globally, and when will it start to peak?'"
At midday, the Dow Jones Industrial Average .DJI fell
919.31 points, or 3.17%, to 28,073.1, the S&P 500 .SPX lost
102.59 points, or 3.07%, to 3,235.16 and the Nasdaq Composite
.IXIC dropped 337.09 points, or 3.52%, to 9,239.50.
The pan-European FTSEurofirst 300 index .FTEU3 lost 3.76%,
with Milan's stock market down more than 5% after a spike in
cases of the virus left six dead in Italy and parts of the
country's industrial north in virtual lockdown. .EU
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
2.82%, its biggest single-day decline since Feb. 5, 2018, when
concerns over a spike in inflation sent stocks tumbling.
Emerging market stocks lost 2.71%. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 2.58%
lower, while Japan's markets were closed for a holiday.
"Everybody sees that this could be another leg down for the
economy, and we were already in quite a fragile state to begin
with," said Elwin de Groot, Rabobank's head of macro strategy.
"It could be another step toward a recession in more countries."
In Asia overnight, South Korea's KOSPI .KS11 slumped 3.9%
after the government declared a high alert.
The virus has now killed nearly 2,500 people in China, which
has reported some 77,000 cases, and spread to 29 other countries
and territories, with a death toll outside of China around two
dozen, according to a Reuters tally. Iran, which announced its first infections last week, said
it had confirmed 43 cases and eight deaths, with most cases in
the holy city of Qom. Saudi Arabia, Kuwait, Iraq, Turkey and
Afghanistan imposed travel and immigration restrictions on the
Islamic Republic.
"The idea that the coronavirus has been fully contained has
been firmly banished," said Chris Beauchamp, chief market
analyst at IG. "This means the economic forecasts of the impact,
such as they are, will need to be revised, with a greater impact
now to be expected."
SURGE TO SAFETY
U.S. fed fund futures 0#FF: signaled more rate cuts later
this year and a near 20% chance of a cut next month.
Benchmark 10-year notes US10YT=RR last rose a full point
in price to yield 1.3638%, down from 1.47% late on Friday. The
30-year bond US30YT=RR touched a record low yield of 1.812.
In currency markets the Japanese yen strengthened 1.02% to
110.46 per dollar.
The dollar index =USD fell 0.236%, with the euro EUR= up
0.17% to $1.0861.
"Ultimately this is all a risk-off trade," said Marvin Loh,
senior global markets strategist at State Street Global Markets.
"When you look at the yen, when you look at the Swissie,
when you look at rates, it is risk-off. It's probably
reflective, to a certain degree, of the market being a little
too sanguine up until now ... so there's an adjustment process
around it."
Korea's won KRW= was down 1% at 1,219.06 after falling to
its weakest since August 2019. Emerging-market currencies, from
Mexico's peso MXN= and Turkey's lira TRY= to Poland's zloty
PLN= and Russia's ruble RUB= , were all in the red.
In commodity markets, U.S. crude CLc1 fell 4.93% to $50.75
per barrel and Brent LCOc1 was last at $55.43, down 5.25% on
the day.
Among the main industrial metals, copper CMCU3 lost 1.04%
to $5,705.00 a tonne. MET/L
"As the virus spreads globally, additional downside
revisions in oil demand for this year may be required," Jim
Ritterbusch, president of Ritterbusch and Associates, said in a
note.
"The accelerated sell-off in the stock market has become
difficult for the oil market to ignore," he said.
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
World FX rates in 2020 http://tmsnrt.rs/2egbfVh
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