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GLOBAL MARKETS-Europe suffers worst day since 2016 as virus spreads

Published 02/24/2020, 08:08 PM
Updated 02/24/2020, 08:16 PM
GLOBAL MARKETS-Europe suffers worst day since 2016 as virus spreads
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(Updates levels throughout after European open)
* European stocks tumble, Italy down over 4% after virus
spread
* 10-year Treasury yields rally to lowest since mid 2016
* MSCI ex-Japan extends losses, Japan closed for public
holiday
* Gold prices surge to highest since 2013
* Dollar pushes higher, batters emerging markets
* E-mini futures for S&P500 fall more than 1% in Asia
trading
* South Korea on alert after virus cases surge to 763
* China reports 2,592 die of virus

By Marc Jones
LONDON Feb 24 (Reuters) - Europe's share markets suffered
their biggest slump since mid- 2016 on Monday, as a jump in
coronavirus cases in Italy, South Korea, Japan and Iran sent
investors scrambling to the security of gold and government
bonds.
Milan's stock market plunged over 4.5% after a spike in
cases of the virus left parts of Italy's industrial north in
virtual lockdown. .EU
Frankfurt .GDAXI and Paris .FCHI both fell more than
3.5% and London's FTSE dropped 3.3%, wiping at least $400
billion off the region's market value in a few hours.
The flight to safety was just as resounding. Gold surged
2.5% to a seven-year high of $1,680 an ounce, taking its gains
for the year past 10%. GOL/
Bonds rallied, too. Ten-year U.S. Treasury yields dropped
below 1.4% US10YT=RR for the first time since July 2016. The
30-year Treasury touched a record low at just under 1.85%
US30YT=RR and German yields dropped to -0.475% DE10YT=RR ,
their lowest in more than four months. GVD/EUR
"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 Rabobank's head of macro strategy, Elwin de Groot.
"It could be another step towards a recession in more
countries."
In Asia, South Korea's KOSPI .KS11 slumped 3.9% after the
government declared a high alert. The number of cases rose to
763 and deaths to seven. Japanese markets were closed, but Australia's benchmark
index slid 2.25% and New Zealand fell about 1.8%. .AXJO
.NZ50 . China's blue-chip CSI300 .CSI300 closed down 0.4%,
taking MSCI's broadest index of Asia-Pacific shares outside
Japan .MIAPJ0000PUS to its lowest since early February.
The virus has now killed 2,592 people in China, which has
reported 77,150 cases, and spread to some 28 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 of the
cases in the holy city of Qom. Saudi Arabia, Kuwait, Iraq,
Turkey and Afghanistan imposed travel and immigration
restrictions on the Islamic Republic.
"There is lots of bad news on the coronavirus front with the
total number of new cases still rising," AMP chief economist
Shane Oliver wrote in a note. "Of course, there is much
uncertainty about the case data. New cases outside China still
look to be trending up."

FUTURES GLOOM
Among U.S. stock futures, E-minis for the S&P 500 ESc1
fell 2.3%. CBOE's VIX volatility index .VIX , the so-called
fear gauge, reached its highest since August.
U.S. fed fund futures 0#FF: signalled more rate cuts later
this year and a near 20% chance of a cut next month.
FX markets reacted by pushing up the safe-haven Japanese yen
to 111.34 yen per dollar JPY= . But against the rest of the
world, the dollar was again showing its strength.
The euro was squeezed towards $1.08 EUR= and the
Australian dollar, often traded as a proxy for China risk, fell
to an 11-year low of $0.6585 AUD=D3 . /FRX
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
and Russia's rouble were all in the red.
In commodity markets, Brent crude LCOc1 fell 3.5%, or
$2.1, to $56.35 a barrel. U.S. crude CLc1 dropped 3%, or
$1.64, to $51.74 a barrel. Among the main industrial metals,
copper fell 1.4% and zinc was down 2.5%. MET/L
"Oil prices will remain vulnerable here as energy traders
were not pricing in the coronavirus becoming a pandemic," said
Edward Moya, senior market analyst at OANDA.
"While some parts of China are seeing improving
statistics... markets will remain on edge until we start seeing
the situation improve in Iran, Italy, South Korea and Japan."


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Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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