* European shares reverse early gains
* Reports of new coronavirus cases offset lockdown easings
* Oil prices, energy stocks pressured lower
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, May 11 (Reuters) - Stock markets gave up their early
gains on Monday after reports of a pick-up in new coronavirus
cases that threatens to slow or reverse the loosening of
lockdown measures.
Shares had initially gained, led by Asia, where markets
cheered further loosening of coronavirus restrictions in the
region - New Zealand will ease some curbs from Thursday, and
Japan plans to end a state of emergency for areas where
infections have stabilised. In Europe, millions in France are set to cautiously emerge
from one of the region's strictest lockdowns, while Britain laid
out its own gradual path out of lockdown. But South Korea warned of a second wave of the new
coronavirus as infections rebounded to a one-month high, while
new infections accelerated in Germany, which has been easing its
own lockdown. Investors have tried to stay optimistic in recent weeks,
opening up a gap between dire economic conditions on the ground
and a stock market rebounding because of huge stimulus
programmes as well as on the timing and speed of any recovery.
A spike in new cases in countries that have already begun to
relax restrictions on commerce, however, jolted market
confidence badly.
"If we do have a second wave and lockdowns, that's almost
the worst outcome from an economic perspective," said Guy
Miller, chief market strategist at Zurich Insurance Company.
Miller said that would "postpone business investment
indefinitely" and see consumers retrench as hopes for a quick
economic recovery were dashed.
"The next two or three weeks are going to be pivotal," he
said, as evidence of how businesses and consumers were
responding to the loosening of lockdown measures.
By 1005 GMT, the Euro STOXX 600 .STOXX was down 0.47%.
Germany's .GDAXI DAX was 0.34% lower and Britain's FTSE 100
.FTSE 0.33% in the red. Energy and travel stock were among the
hardest hit.
E-Mini futures for the S&P 500 ESc1 dropped 0.38%.
World shares, measured by the MSCI world equity index
.MIWD00000PUS which tracks shares in 49 countries, reversed
earlier gains and were flat on the day. The index has risen 16%
from its March lows.
As investors look to the reopening of economies, most have
ignored dismal economic data. The most recent was Friday's U.S.
jobs report, which showed the biggest jump in unemployment since
the Great Depression.
But the numbers were not as bad as economists had expected,
and analysts say that markets have already priced in the huge
hit to growth and employment. Record monetary and fiscal
stimulus has fired up the rebound in asset prices.
"Risk bears are being sent into hibernation," said Kit
Juckes, a markets strategist at Societe Generale. "Markets focus
on re-opening economies and policy activism, bears struggle to
understand how they can ignore re-infection and economic
destruction."
The bond market seems to think any economic recovery will be
slow. Two-year U.S. government bond yields US2YT=RR hit record
lows at 0.105% and Fed fund futures 0#FF: turned negative for
the first time ever. US/
The rally in U.S. bond prices has come even as the U.S.
Treasury plans to borrow trillions of dollars in the next few
months to plug a gaping budget deficit.
The decline in U.S. yields might have been a burden for the
dollar, but with rates everywhere near to or less than zero,
major currencies have been stuck in tight ranges.
On Monday, the dollar was up 0.2% against a basket of
currencies =USD but made more headway against the safe-haven
Japanese yen, rising 0.5% to 107.23 JPY=EBS .
The euro dropped 0.2% to $1.0827 EUR= while sterling lost
0.4% to $1.2367 GBP=D3 .
In commodity markets, oil prices fell as a glut weighed on
prices and the pandemic eroded global demand. O/R
Brent crude LCOc1 fell $1.11, or 3.6%, at $29.86 a barrel.
U.S. West Texas Intermediate crude CLc1 fell 92 cents, or
3.7%, to $23.82. The spot gold price climbed back to $1,700 an ounce XAU= .
Buoyed by its safe-haven appeal, gold has rallied more than 12%
so far in 2020, hitting seven-and-a-half year highs.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Emerging markets http://tmsnrt.rs/2ihRugV
The MSCI world equity index IMAGE https://tmsnrt.rs/3dCbIee
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>