GLOBAL MARKETS-Asia shares bounce after rout, rush for dollars causing stress

* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Stocks try to rally after punishing week
* Massive fiscal and monetary stimulus offers lifeline
* Dollar holds big weekly gains, strains $ borrowers
* Oil firms after largest daily rally on record

By Wayne Cole
SYDNEY, March 20 (Reuters) - Asian shares staged a rare
rally on Friday as Wall Street eked out gains, bonds rallied and
oil boasted its biggest bounce on record, though the panicked
rush into U.S. dollars suggested the crisis was far from done.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 3.2%, after seven sessions of losses.
As the spread of the coronavirus brought much of the world
to a halt, nations have poured ever-more-massive amounts of
stimulus into their economies while central banks have flooded
markets with cheap dollars to ease funding strains. The U.S. Senate was debating a $1 trillion-plus package that
would include direct financial help for Americans, relief for
small businesses and steps to stabilise the economy. Sources told Reuters that China was set to unleash trillions
of yuan of fiscal stimulus to revive an economy facing its first
contraction in four decades. "The speed and aggression with which authorities are
wheeling out measures to cushion the economic fallout from the
virus and sowing the seeds for a hopefully rapid recovery, has
resonated somewhat in equity markets," said Ray Attrill, head of
FX strategy at NAB.
"Yet there is little doubt that funds need to buy dollars to
rebalance hedges in light of the 30% fall in equity markets so
far this month," he added. "The dollar remains the pre-eminent
safe-haven asset during times of extreme market stress."
The dollar's surge is a nightmare for the many countries and
companies that have borrowed heavily in the dollar, leading to
yet more selling of emerging market currencies in a negative
feedback loop.
Such was the stress that dealers hear whispers of a new
Plaza Accord, the 1985 agreement when major central banks used
mass intervention to restrain a rampant dollar.
For now, investors in Asia were merely happy Wall Street had
not plunged again and South Korean shares .KS11 bounced 3.5%,
though that still left them down 14% for the week.
Australia's beleaguered market .AXJO gained 4.2%, and
futures for Japan's Nikkei .N225 were trading up at 17,435,
compared to a cash close of 16,552.
E-Mini futures for the S&P 500 ESc1 eased 1.2%, perhaps
unsettled by news California' governor had issued a statewide
"stay at home" order to residents. RELIEF
Aiding sentiment was a 25% rally in oil prices overnight.
U.S. crude CLc1 added another 26 cents to $26.17 a barrel on
Friday, up from a low of $20.09, while Brent crude LCOc1 stood
at $28.25. O/R
This was a major relief as the collapse of crude prices had
blown a huge hole in the budgets of many oil producers and
forced them to dump any liquid asset to raise cash, with U.S.
Treasuries a particular casualty.
That was one reason yields on U.S. 10-year Treasuries
US10YT=RR had climbed over 100 basis points in just nine
sessions to reach 1.279%, before steadying a little at 1.15%.
At the same time, funds across the world were fleeing to the
liquidity of U.S. dollars, lifting it to peaks last seen in
January 2017 against a basket of its peers =USD .
"Such price action suggests significant market stress,
particularly on the wide range of entities outside the U.S. that
have borrowed in dollars," said Richard Franulovich, head of FX
strategy at Westpac.
"It could last until global capital flows and investor risk
appetite normalises, possibly months away."
The euro was not far from three-year lows at $1.0731 EUR= ,
having shed 3.3% for the week so far - the steepest decline
since mid-2015. The dollar did ease back a touch to 110.22 yen
JPY= , but was still up 2.1% on the week.
Sterling continued its wild swings with a rally to $1.1646
GBP= , having earlier hit its lowest since 1985 around $1.1404.
It was still down a hefty 5.2% for the week.
The jump in the dollar has made gold more expensive in other
currencies and pushed its price down 3% for the week to
$1,482.70 per ounce XAU= . GOL/

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(Editing by Sam Holmes and Jacqueline Wong)