* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* European shares fall, MSCI All-Country World Index down
* Luxury and travel stocks suffer across the board
* Yen, gold, bonds gain on safe haven move
* U.S. President Trump to speak at Davos
By Ritvik Carvalho
LONDON, Jan 21 (Reuters) - Global shares took a beating on
Tuesday, wiping out all gains made at the start of the week as
mounting concerns about a new strain of coronavirus in China
sent a ripple of risk aversion through markets.
Authorities in China confirmed that a new virus could be
spread through human contact, reporting 15 medical staff had
been infected and a fourth person had died. Safe-haven bonds and the yen gained as investors were
reminded of the economic damage done by the SARS virus in
2002-2003, particularly given the threat of contagion as
hundreds of millions travel for the Lunar New Year holidays.
"I'm not an expert in the pandemics, but you can look at
previous examples like the SARS outbreak which also originated
from Asia," said Cristian Maggio, Head of Emerging Markets
Strategy at TD Securities in London.
Noting that China had initially downplayed the full extent
of the SARS outbreak, he said "I think the market might be
fearing something similar."
The mood swing saw MSCI's All-Country World Index
.MIWD00000PUS slip 0.4%, wiping out gains made at the start of
the week on Monday. Asian markets were hit particularly hard.
Hong Kong, which suffered badly during the SARS outbreak,
saw its index fall 2.8% .HSI .
Japan's Nikkei .N225 lost 0.9% and Shanghai blue chips
.CSI300 1.7%, with airlines under pressure. The caution spread
to E-Mini futures for the S&P 500 ESc1 which eased 0.5%.
The chill in Asia carried over to European markets, where
shares of luxury goods makers - which have large exposure to
China - were among the biggest fallers. .EU
Germany's 10-year government bond yield touched one-week
lows. GVD/EUR
Investors had already been guarded after the International
Monetary Fund trimmed its global growth forecasts, mostly due to
a surprisingly sharp slowdown in India and other emerging
markets. There had been some relief as U.S. President Donald Trump
and French President Emmanuel Macron seemed to have struck a
truce over a proposed digital tax. The two agreed to hold off on a potential tariffs war until
the end of the year, a French diplomatic source said.
Trump is due to deliver a speech at the World Economic Forum
in Davos later on Tuesday, and trade and tariffs could be on the
agenda.
In a tweet late on Monday, Trump said he would be bringing
"additional Hundreds of Billions of Dollars back to the United
States of America! We are now NUMBER ONE in the Universe, by
FAR!!"
ALL STEADY AT BOJ
The Bank of Japan cited lessened trade risks when nudging up
forecasts for economic growth after holding a policy meeting on
Tuesday. As widely expected, the BOJ maintained its short-term
interest rate target at -0.1% and a pledge to guide 10-year
government bond yields around 0%, by a 7-2 vote.
Japan's yen picked up a bid on the safe-haven move and the
dollar dipped to 109.93 JPY= from an early 110.17 JPY= . It
also gained on the euro EURJPY= , leaving the single currency
lower to the dollar at $1.1090 EUR= .
Against a basket of currencies, the dollar was steady at
97.638 .DXY , just off a four-week high of 97.729.
The Australian dollar AUD=D3 took a knock from the flu
worries since it attracts large numbers of Chinese tourists, who
tend to be big spenders over the Lunar New Year holidays.
Australia said it would step up screening of some flights
from Wuhan. The outbreak was particularly badly timed as the tourism
industry has been mauled already by bushfires sweeping the
country.
Spot gold hit a 2-week high of $1,568.35 per ounce XAU= ,
but traded 0.2% lower in early deals in London.
Oil prices slid nearly 1%, having earlier gained on the risk
of supply disruption in Libya. O/R
Brent crude LCOc1 futures fell 1% to $64.60 a barrel,
while U.S. crude CLc1 fell 0.92% to $58.09 a barrel.