* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei and S&P 500 futures slip on safe-haven shift
* Spooked by economic risks around China virus outbreak
* BOJ keeps policy steady, next hurdle is Trump speech at
Davos
By Wayne Cole
SYDNEY, Jan 21 (Reuters) - Asian shares took a sudden turn
for the worse on Tuesday as mounting concerns about a new strain
of coronavirus in China sent a ripple of risk aversion through
markets.
Safe-haven bonds and the yen edged higher as investors were
reminded of the economic damage done by the SARS virus in 2003,
particularly given the threat of contagion as hundreds of
millions travel for the Lunar New Year holidays.
"It's an essential enough development that markets will
monitor it on the risk radar as, if things turn critical, it
could provide a massive blow to the airline industry and a
knockout punch to local tourism," said Stephen Innes, Asia
Pacific market strategist at AxiCorp.
The mood swing saw MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS slip 1% after a steady
start. Hong Kong, which suffered badly during the SARS outbreak,
saw its index fall 2% .HSI .
Japan's Nikkei .N225 lost 0.8% and Shanghai blue chips
.CSI300 1.5%, with airlines under pressure. The caution spread
to E-Mini futures for the S&P 500 ESc1 which eased 0.4%, while
EUROSTOXX 50 futures .STXEc1 lost 0.3%.
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 109.92 JPY= from an early 110.17 JPY= . It
also gained on the euro EURJPY= , leaving the single currency
flat on the dollar at $1.1092 EUR= .
Against a basket of currencies, the dollar was steady at
97.599 .DXY , just off a four-week high of 97.729.
The Australia 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 edged up to $1,566.71 per ounce XAU= , and back
toward a seven-year peak of $1,610.90 reached last week.
Oil prices hesitated, having earlier gained on the risk of
supply disruption in Libya. O/R
Brent crude LCOc1 futures eased 31 cents to $64.89 a
barrel, while U.S. crude CLc1 fell 5 cents to $58.49.
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>