* MSCI world stocks index drops to two week low Europe
equities
head for fourth day of losses
* U.S. stimulus deal seen 'elusive' before Nov. 3 election
* Oil markets steadies after heavy tumble
* Yuan sticks around 2018 highs, Turkey expected to hike
rates
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Oct 22 (Reuters) - World shares slid to a two-week
low on Thursday, and oil steadied after another heavy fall, as a
surge in global COVID-19 cases and fractious U.S. stimulus talks
kept financial markets cautious.
Europe's early equity falls were their fourth in a row,
while a disappointing German consumer morale survey meant it was the first dip of the week for the high-flying
euro EUR= . .EU /FRX
The continent has seen the number of coronavirus cases surge
to a record high, with Spain becoming the first Western European
country to exceed 1 million infections and France, Britain and
Italy all setting record increases recently.
Bond market caution also ushered sensitive Italian
government debt yields higher ahead of a 30-year bond sale
there, as traders drifted back into uber-safe German Bunds.
"In the summer we were in the eye of the storm, I think,"
said Rabobank strategist Piotr Matys, likening the drop in
COVID-19 cases to the lull that occurs in the middle of
hurricanes.
"Some governments assumed the worst was over... but now the
invisible enemy is hitting even harder and I am worried about
the fragile economic recovery."
Sentiment was also being buffeted after U.S. President
Donald Trump accused rival Democrats on Wednesday of being
unwilling to craft an acceptable compromise on fresh stimulus,
following reports of progress earlier in the day. It remains unclear whether negotiations will continue ahead
of the U.S. presidential and congressional elections on Nov. 3.
"We still think that this deal will remain elusive in the
sense that this amount that we are talking about, $1.88
trillion, that's about 9% of GDP, said Carlos Casanova, a senior
economist at Union Bancaire Privee (UBP) in Hong Kong.
Speaker Nancy Pelosi's package is even higher at around 10%
of GDP.
"Even if both sides do manage to reach an agreement, given
the tight deadline ahead of the election it's unlikely that
something like that would be able to go through the Senate
smoothly," said Casanova.
In the currency markets, the dollar was a modest 0.1% higher
against the yen at 104.66 JPY= , while the euro's dip EUR=
saw it notch down 0.12% to $1.1847.
But against a basket of major peers the dollar =USD
appeared relatively unaffected by setbacks to stimulus talks,
steadying after touching a seven-week low to trade slightly
higher at 92.736.
Overnight, MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS had slipped 0.3%, while the Nikkei
.N225 closed 0.7% lower. .T
ELECTION LOOMING
Uncertainty over the passage of a bill to stimulate a
pandemic-ravaged economy comes as the United States also faces a
new wave of COVID-19 cases.
Nearly two-thirds of U.S. states were in a danger zone of
coronavirus spread and six, including election battleground
Wisconsin, reported a record one-day increase in COVID-19 deaths
on Wednesday. Wall Street's three major averages closed lower on Wednesday
after a choppy trading session, and futures markets pointed to
another subdued start later. "The focus is absolutely on how a decisive win in this
election can unlock fiscal stimulus," J.P. Morgan Asset
Management global market strategist Hugh Gimber said, cautioning
however that investors needed to treat next month's U.S. vote
carefully.
The yield on benchmark U.S. 10-year Treasury notes
US10YT=RR ticked down to 0.8092%, from a U.S. close of 0.816%
on Wednesday.
In commodity markets, oil prices steadied after sharp losses
on Wednesday, when higher U.S. gasoline inventories pointed to
deteriorating fuel demand again. EIA/S
U.S. West Texas Intermediate (WTI) crude CLc1 futures
hovered near $40 a barrel and Brent crude LCOc1 futures were
0.3% higher at $41.85.
Gold eased as the dollar edged up, with spot gold XAU=
down 0.4% at 1,916 per ounce. GOL/
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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