* U.S. Treasury yields loiter near record lows
* Dollar slides vs Asian currencies
* S&P 500 futures rise as Biden resurgent in primaries
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook and Scott Murdoch
SINGAPORE/HONG KONG, March 4 (Reuters) - Asian shares
struggled to find their footing on Wednesday and bonds held
stunning gains, as an emergency rate cut from the U.S. Federal
Reserve seemed to stoke rather than soothe fears over the
coronavirus' widening global economic fallout.
The surprise 50 basis point cut, the Fed's first
off-schedule move since the depths of the financial crisis more
than a decade ago, came with comments highlighting both the
scale of the challenge and the limits of monetary policy.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.2%, though most of the gains were
confined to South Korea where the government announced a big
stimulus package.
European futures pointed to a steady open, with FTSE futures
flat FFIc1 and EuroSTOXX 50 futures up 0.3% STXEc1 .
After Wall Street tumbled overnight, futures for the S&P 500
ESc1 rose 1.4% on the resurgent performance of Joe Biden in
Democratic Party primaries. A moderate, Biden is now set up as
the main challenger to self-described democratic socialist
Bernie Sanders. Currencies and bonds showed little such exuberance. The
dollar remained on the back foot and the yield on benchmark
10-year U.S. Treasuries, which falls when prices rise, held at
0.9748% - not far over the once unimaginable low of 0.9060% hit
overnight.
"U.S. treasuries are moving even lower and credit spreads
are widening in Asia today. That is not the usual effect that
you would see from a move like this," said Rishi Jalan,
Citigroup co-head of debt capital markets syndication.
"This decision shows the coronavirus impact is real and
could have a material impact on growth. For market participants,
it shows a thinking of 'The Fed is expecting something that we
have not yet priced in.'"
Japan's Nikkei .N225 closed flat, while Australia's
S&P/ASX 200 .AXJO fell 1.7%. Stocks in Hong Kong .HSI and
China .SSEC traded either side of flat.
Korean stocks .KS11 bucked broader weakness, rising 2%
after the government announced a $9.8 billion stimulus package
to mitigate the impact of the virus outbreak. The dollar touched a five-month low against the safe-haven
Japanese yen JPY= and slipped against most other Asian
currencies. FRX/
"Given the way that the market's reacted, it's telling you
that there's a little bit of panic," said Andrew Gillan, head of
Asia ex-Japan equities at Janus Henderson in Singapore.
"They're a bit worried that interest rate cuts are not going
to make a massive difference...and what's going to be required
is probably going to be more fiscal stimulus," he said, his fund
having invested, for example, in Chinese cement and construction
stocks in anticipation of more government support measures.
CUTS AREN'T ENOUGH
The Fed's surprise move followed a massive shift in money
market pricing late last week. 0#FF:
Futures swung rapidly to expect such a cut at the Fed's
March meeting. FEDWATCH
Now they imply another 50 basis points of easing by July,
even as the investors and the Fed itself raise questions about
the efficacy of easing to deal with a public health crisis.
"We do recognise that a rate cut will not reduce the rate of
infection, it won't fix a broken supply chain; we get that," Fed
Chairman Jerome Powell told reporters at a press conference.
More than 3,000 people have been killed by the coronavirus,
about 3.4% of those infected - far above seasonal flu's fatality
rate of under 1%.
It continues to spread quickly beyond the epicentre in
China, with Italy overnight reporting a jump in deaths to 79 and
South Korea reporting more than 500 new cases on Wednesday.
"The question here is whether a conventional interest rate
response is sufficient," said Sameer Goel, chief strategist,
Asia macro, at Deutsche Bank in Singapore.
"It's still not clear how big the problem ultimately is, or
could be, and until you know that, it's hard to know how much
medicine to apply to it."
In currencies, the U.S. dollar clawed back some of its
losses on the euro and yen, but was broadly on the back foot.
It last traded at $0.6596 per Australian dollar AUD=D3 and
$1.1160 per euro EUR= . After falling to as low as 106.84 yen,
the dollar pared losses to buy 107.42 yen by midafternoon
JPY= .
Oil prices firmed on expectations of production cuts, with
Brent rising 90 cents to $52.79 per barrel LCOc1 and U.S.
crude up 1.9% at $48.06 a barrel CLc1 . O/R
Gold rose 0.2% to $1642.21 an ounce XAU= . GOL/
(Editing by Sam Holmes and Kim Coghill)