GLOBAL MARKETS-World stocks plunge into bear market on U.S. travel curbs, ECB move

(Updates prices, comment; adds NY Fed)
* MSCI All-Country World index down over 20% from recent
peak
* European shares hit lowest level since 2013
* Oil slumps, gold sinks, bitcoin plunges 25%
* Wall Street briefly halts trading; VIX hits highest since
2008

By Rodrigo Campos
NEW YORK, March 12 (Reuters) - Panic hit world financial
markets on Thursday, after stimulus efforts from the European
Central Bank failed to calm investors alarmed by U.S. moves to
restrict travel from Europe over the coronavirus pandemic.
Global stocks plunged below bear market thresholds, with
European shares .STOXX taking their largest percentage drop on
record and Wall Street's Dow industrials index .DJI on track
for its largest weekly percentage decline in over a decade.
The New York Federal Reserve pumped more liquidity to banks,
briefly reversing some of the day's losses. It was the third
substantial increase in repo support announced by the U.S.
Federal Reserve this week, a sign the Fed is taking drastic
steps to inject more liquidity into the banking system as
markets show signs of stress. The U.S. dollar rose indiscriminately, in yet another sign
of market stress.
Oil prices sank further, while traditional safe-haven assets
like gold and the Japanese yen lost value against the dollar.
Trading was halted for 15 minutes shortly after the open in
New York after the benchmark S&P 500 stock index tumbled more
than 7%. It was recently trading down 7.8%.
In a televised address that also included support measures
for the economy, U.S. President Donald Trump imposed
restrictions on travel from Europe to the United States,
shocking investors and travelers.
Traders were disappointed after hoping to see broader
measures to fight the spread of the virus and blunt its expected
blow to economic growth.
"The economy is going to grind to a halt in the next month
and the recession risk is real now," said Zhiwei Ren, managing
director at Penn Mutual Asset Management in Horsham,
Pennsylvania.
Trump said the United States would suspend all travel from
Europe, except Britain and Ireland, for 30 days starting on
Friday. He later said trade would not be affected by the
restrictions. Worries spread far beyond stocks to companies' lines of
credit and their ability to finance business activity in the
short term. Fear of the unknown "is gripping markets and it's more
impactful in the credit markets at the moment, liquidity has
effectively evaporated," said John McClain, a portfolio manager
at Diamond Hill Capital in Columbus, Ohio. "People are looking
ahead and saying what's this world going to feel like when we're
all working at home."
The European Central Bank approved fresh stimulus measures
and temporarily dropped banks' capital requirements to help the
euro zone cope with the shock of the pandemic, but kept interest
rates on hold, disappointing markets. The Dow Jones Industrial Average .DJI sank 1,980.97
points, or 8.41%, to 21,572.25, the S&P 500 .SPX lost 213.31
points, or 7.78%, to 2,528.07 and the Nasdaq Composite .IXIC
dropped 600.23 points, or 7.55%, to 7,351.82.
The pan-European STOXX 600 index .STOXX lost 11.48% and
emerging market stocks lost 6.52%. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 5.84%
lower, while Japan's Nikkei .N225 lost 4.41%.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
8.32%, and was down more than 20% from its 52-week peak.
The VIX volatility index .VIX - Wall Street's "fear gauge"
- and an equivalent measure of volatility for the Euro Stoxx 50
.V2TX hit their highest since the 2008 financial crisis.
Fed fund rate futures 0#FF: are now pricing in a 1.0
percentage point cut, rather than 0.75, at a policy review next
week.
The euro weakened after the ECB stimulus announcement.
Demand for dollars via the currency derivative markets
surged to the highest levels in years in a sign that
coronavirus-induced economic stress is starting to manifest
itself in a broad scramble for funding in dollars. "Dollar liquidity is king in times of crisis and that is
what the blow-out in swap spreads is telling us," said Kenneth
Broux, a currency strategist at Societe Generale in London.
He said this could mark a move into the next sell-off stage,
which could mean a three-week-long worldwide rout in shares and
riskier bonds giving way to a rush for dollars.
The dollar index =USD rose 0.735%, with the euro EUR=
down 0.66% to $1.1193.
The Japanese yen weakened 0.61% versus the greenback at
105.21 per dollar, while Sterling GBP= was last trading at
$1.2619, down 1.57% on the day.
The Brazilian real BRL= , Colombian peso COP= and Mexican
peso MXN= all hit historic lows versus the greenback.
Bitcoin plunged 23.3%, amid wild volatility in
cryptocurrency markets. BTC=BTSP
Oil prices were also hit, compounded by an intensifying
price war between Saudi Arabia and Russia, on top of fears of a
sharp slowdown in the global economy.
U.S. crude CLc1 fell 5.61% to $31.13 per barrel and Brent
LCOc1 was last at $32.87, down 8.16% on the day.
Spot gold XAU= dropped 3.0% to $1,585.26 an ounce.
Palladium XPD= dropped 20.6% to $1,830.06 an ounce.
Among industrial metals, copper CMCU3 lost 1.52% to
$5,445.00 a tonne.
Benchmark 10-year notes US10YT=RR recently rose 10/32 in
price to yield 0.7915%, from 0.822% late on Tuesday.


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Global assets in 2020 http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
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