* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* European stocks bounce, Wall St points to positive start
* Coronavirus spreads, death toll rises to 427
* Commodities steady amid worries about China demand
* Key metals set for best day of year so far
By Marc Jones
LONDON, Feb 4 (Reuters) - World markets bounced on Tuesday,
with Chinese stocks reversing some of a previous
coronavirus-related plunge amid official efforts to soothe
nerves and both Europe and metals scoring their best day of the
year so far.
Though sentiment remained fragile with the virus still
spreading and oil slumped near 13-month lows, dealers seemed to
have rationalised the worst of their worries.
MSCI's main world index .MIWD00000PUS jumped 0.5% led by
the biggest leap in commodity-focused stocks in over three
months and some strong rebounds from Shanghai, South Korea
.KS11 and Australia .AXJO overnight.
Wall Street futures were up over 1% .N and from Europe
there was a 1.5% surge from London's heavyweight FTSE as it
enjoyed both the mining rally and a weak pound caused by renewed
worries about Britain's post-Brexit trade relations with the EU.
.FTSE .EU
China's markets had steadied in choppy trade after anxiety
over the virus erased some $400 billion in market value from
Shanghai's benchmark index on Monday when it reopened following
the extended Lunar New Year holiday.
The Shanghai Composite .SSEC closed up 1.3%, while the
blue-chip CSI300 .CSI300 rebounded 2.6% after a near 8% slide
on Monday. Hong Kong's Hang Seng .HIS advanced 1.2%. .SS
Despite the relative market calm on Tuesday, the outbreak
continued to generate unnerving headlines with Hong Kong
reporting its first coronavirus death - the second fatality
outside mainland China - as the overall death toll reached 427.
"At the start to the week there was a fear that when China
reopened there would be further disruption to the markets ...
(but) investors are tentatively going back into risk," said MUFG
strategist Lee Hardman.
In an effort to stop the plunge, China's state-backed
Securities Times published an op-ed on Tuesday to call on
investors not to panic. That followed moves by China's securities regulator on
Monday to limit short selling and stop mutual fund managers
selling shares unless they face investor redemptions, according
to Reuters. China's central bank has flooded the economy with cash while
trimming some lending rates, but analysts suspect more will be
needed to offset economic fallout from the virus. "Given the extent of the shutdowns in China as well as the
rapid rise in the virus that is likely to continue through March
or April, a significant hit to China and regional growth is very
likely," said JPMorgan economist Joseph Lupton.
"We would assume that in addition to bridging any funding
stresses, fiscal policies will need to be ramped up to support
growth once the contagion gets under control."
WALL STREET BOUNCE
U.S. markets were expected to follow suit, with major stock
futures trading up around 1.2% .N even after disappointing
earnings results from Google parent Alphabet GOOGL.O .
Wall Street had taken comfort on Monday from a surprisingly
solid reading of U.S. manufacturing with the Dow .DJI ending
Monday with a rise of 0.5%, while the S&P 500 .SPX gained 0.7%
and the Nasdaq .IXIC 1.3%. .N
"This is just a typical reversal after a big fall. Vague
concerns about (the) ...virus are still weighing on U.S.
stocks," said Masanari Takada, cross asset strategist at Nomura
Securities in Tokyo.
U.S. factory activity rebounded in January after contracting
for five straight months amid a surge in new orders, offering
hope that a prolonged slump in business investment has probably
bottomed out. The upbeat report nudged Treasury yields up from deep lows
and gave the U.S. dollar a modest lift.
It firmed to all the way to 109.10 yen JPY= from an
overnight low of 108.30, while the euro faded a fraction to
$1.1050 EUR= but remained well within recent snug ranges.
Against a basket of currencies, the dollar bounced back to
97.908 =USD from a trough of 97.406.
China's yuan gained 0.3% in international markets to 6.9935
yuan per dollar CNH= , in line with rebounds in Chinese shares
and holding above its one-month low of 7.0230 per dollar hit in
European trade on Monday.
The Aussie dollar rose 0.4% to $0.6718 AUD=D4 , pulling
away from the 10-1/2-year low of $0.6670 touched in October,
after the Reserve Bank of Australia kept its main cash rate at a
record low of 0.75%. Sterling was a touch firmer at $1.3015 GBP=D4 , having lost
1.5% on Monday when UK Prime Minister Boris Johnson set out
tough terms for talks with the European Union, rekindling fears
Britain would reach the end of an 11-month Brexit transition
period without agreeing a trade deal. STEADY
In the commodity markets, oil futures staged a modest
rebound, one day after slumping to the lowest in more than a
year on worries about the impact of the coronavirus on demand.
Brent crude LCOc1 added 1.3% to $55.18 a barrel, while
U.S. crude CLc1 gained 1.8% to $51.03.
A swath of commodities from copper to iron ore joined oil's
bounce having also been hammered by fears the drag on Chinese
industry and travel would sharply curb demand for fuel and
resources.
Copper CMCU3 which is used as a gauge of global economic
health but in particular China's, traded up 2.6% at $5,666 a
tonne in London official rings. It was its biggest surge of the
year having dropped nearly 13% since Jan. 16. MET/L
The Dalian Commodity Exchange's most-traded iron ore futures
contract DCIOcv1 , expiring in May, steadied too, having
slumped as much as 6.1% to 569.50 yuan ($81.12) a tonne on
Monday. Spot gold was off at $1,564 per ounce XAU= , from a top of
$1.591.46, as the dollar firmed and safe haven demand waned a
little. GOL/ That fading safe-haven bid also nudged bond
prices lower.
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Oil, copper, Chinese stocks performance since virus outbreak
https://tmsnrt.rs/37RShMa
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>