* Pompeo says 'significant evidence' virus emerged from lab
* AUD, NZD hit one-week lows; stocks drop
* China, Japan on holidays
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook
SINGAPORE, May 4 (Reuters) - The dollar inched higher, stock
markets struggled for traction and oil fell on Monday as a
U.S.-China spat over the origin of the coronavirus put the
brakes on optimism about an economic re-start as countries
around the world ease restrictions.
In reduced trade, with China and Japan on holiday, U.S.
stock futures ESc1 fell 1.7% and U.S. crude CLc1 tumbled 7%.
The safe-haven U.S. dollar rallied to one-week highs against the
risk sensitive Australian and New Zealand dollars. AUD/
South Korea's KOSPI .KS11 fell, Hong Kong's Hang Seng
.HSI returned from a two-session holiday with a 3.5% drop,
while Australia's ASX 200 .AXJO eked out a 0.5% gain. .HK
The moves extended a dour start in May which began on Friday
with bleak U.S. data and the threat of fresh trade-war
hostilities between the world's two biggest economies.
U.S. President Donald Trump and Secretary of State Mike
Pompeo added to worries with fresh efforts to pin blame for the
pandemic on China, where the new coronavirus outbreak is
believed to have originated.
The latest salvo came from Pompeo on Sunday who said there
was "a significant amount of evidence" that the virus emerged
from a laboratory in the central Chinese city of Wuhan.
Pompeo did not provide evidence, or dispute a U.S.
intelligence conclusion that the virus was not man-made. But the
comments double down on Washington's pressure on China as U.S.
deaths and economic damage mount.
"The risk of a pullback has increased this week," said Chris
Weston, head of research at Melbourne brokerage Pepperstone.
"The United States is not alone in publicly taking aim at
China, but whether it's Trump, Kudlow or Pompeo the narrative is
more frequent, and traders are selling yuan," he said.
With Chinese markets shut on the mainland, offshore yuan
extended Friday's slump to hit a six-week low of 7.1560 per
dollar before clawing back to flat CNH= .
The Australian dollar AUD=D3 dropped below the 64-cent
mark for the first time in a week, falling 0.4% to $0.6390.
Benchmark U.S. 10-year Treasuries hardly budged from
elevated levels, with the yield holding at 0.6181% as demand for
safe-haven assets was firm. Gold XAU= steadied at $1,696.41
per ounce. GOL/
BLAME GAME
An increase in tension between Washington and Beijing comes
as both countries suffer the economic fallout from the pandemic
and the disruption wrought by lockdowns to combat it.
China has reported its first quarterly GDP contraction since
such records began a generation ago, and posted a slump in April
export orders last week. U.S. manufacturing plunged to an 11-year low last month,
consumer spending has collapsed and some 30.3 million Americans
have filed claims for unemployment in the last six weeks.
"Trump is looking to get re-elected...," said Nomura's joint
head of APAC equity research Jim McCafferty, likening the move
to "Japan-bashing" by then-president Ronald Reagan in the 1980s.
"We've seen this before, and I think as governments around
the world become increasingly domestically focused...finding a
villian elsewhere makes a lot of sense," he said.
That means a challenge for investors looking for income
which seems to have, for now, stumped even billionaire Warren
Buffett. Buffett's firm, Berkshire Hathaway BRKa.N , made an almost
$50 billion loss in the first quarter, but ended it with a
record cash pile and nothing to spend it on.
Buffett said he remains keen on making a big acquisition,
but has not provided financial support to companies as he did
during the 2008 financial crisis because he saw nothing
attractive enough.
Elsewhere in currency markets, the safe-haven Japanese yen
JPY= rose 0.2% to 106.72 per dollar and the euro EUR= was a
touch weaker at $1.0950. The pound GBP= and New Zealand dollar
NZD=D3 slipped.
In commodity markets, U.S. crude futures sank in early trade
on worries about oil oversupply and crumbling demand, even as
some U.S. states and cities around the world start to ease
coronavirus pandemic restrictions. O/R
West Texas Intermediate crude Clc1 futures last sat at
$18.38 per barrel, down $1.40, while Brent futures LCOc1 were
down 2.4%, or 62 cents, at $25.82.
The U.S. April jobs report will be released on Friday, but
some analysts say it may not fully reflect how many people have
been thrown out of work.
(Editing by Kim Coghill and Jacqueline Wong)