* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei and S&P 500 futures slip on safe-haven shift
* Some point to economic risks around China flu outbreak
* Markets await BOJ meeting, Trump speech at Davos
By Wayne Cole
SYDNEY, Jan 21 (Reuters) - Asian shares took a sudden lurch
lower on Tuesday as mounting concerns about a new strain of
pneumonia 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 change 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%.
The mood has 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
Also due later is the outcome of the Bank of Japan's latest
policy meeting. Richard Grace, head of international economics at
Commonwealth Bank of Australia, expects no further easing in
policy in part because the government has launched a fresh
fiscal package worth around 1% of GDP.
"Also, Japan's 10-year government bond yield has been
steadily lifting since declining to -29bp in late August 2019,
and at 0.00%, is at a more than a twelve-month high," he added.
"It suggests a reasonable outlook for Japan's economy."
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.
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
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