GLOBAL MARKETS-Asian shares tick up, aim for second week of gains amid virus scare

* Ex-Japan Asian shares up 0.3%, Nikkei loses 0.5%

* Hopes of government stimulus support shares

* Dollar hits 4-month high as investors flee to U.S. assets

* Euro hits 3-year low ahead of euro zone GDP

By Hideyuki Sano

TOKYO, Feb 14 (Reuters) - Asian shares edged up on Friday,

on course to post the second straight week of gains, helped by

hopes governments will make provisions to soften the impact on

their economies from the coronavirus epidemic.

MSCI's broadest index of Asia-Pacific shares outside Japan

.MIAPJ0000PUS ticked up 0.3%, led by gains in Hong Kong

.MIHK00000PUS and South Korea .MIKR00000PUS . On the week,

the pan-regional index was up 1.94%.

"China is already easing its monetary policy and providing

more liquidity while more stimulus is likely. Factories are

starting to reopen albeit with some delays," said Yukino Yamada,

senior strategist at Daiwa Securities.

Japan's Nikkei .N225 dropped 0.55%, not helped by the news

of first coronavirus death and signs of a potential rise in

domestic human-to-human infections in the country. On Wall Street on Thursday, the S&P 500 .SPX lost 0.16%

but its futures ESc1 gained 0.23% in subsequent Asian trade to

hit record levels.

The daily death toll in Hubei, the Chinese province at the

centre of the coronavirus outbreak, halved and the number of new

cases dropped from a record posted the day before. Ryutaro Kimura, fixed income strategist at Axa Investment

Management, expected "considerable impact" on the global economy

as China now accounts for around 17% compared to 4% during the

SARS outbreak in 2002-2003, and it is integral to more supply

chains.

"That means countries are likely to keep interest rates low

for a longer period, keeping global bond yields low. Such an

expectation in turn is supporting the world's share prices."

Market sentiment improved also after World Health

Organization official said the big jump in China's reported

cases reflects a decision by authorities there to reclassify a

backlog of suspected cases by using patients' chest images, and

is not necessarily the "tip of an iceberg" of a wider epidemic,

Still, sceptics saw it as undermining confidence in data

accuracy, a constant issue in Chinese data. While many investors hope the epidemic will gradually slow

down in coming months, allowing companies and businesses to come

back to normal operations, how long that process will take

remains anybody's guess.

"Until Wednesday, people had been saying that you can buy

shares because the number of new cases had peaked out. The

reality seems to be quite different. An early end to this seems

improbable," said Norihiro Fujito, chief investment strategist

at Mitsubishi UFJ Morgan Stanley Securities.

"Investors will surely avoid Asia for the time being and

will shift funds to the U.S., geographically the most separated

from the region," he said.

That meant more demand for the U.S. dollar in the currency

exchange market.

The dollar's index against a basket of currencies =USD hit

a four-month high, having risen 1.8% so far this month.

The euro fell to as low as $1.0827, its lowest level in

almost three years, and last stood at $1.0836 EUR= .

It also hit a nine-week low against the British pound and

4-1/2 year low against the Swiss franc.

The euro has been bruised also by rising political

uncertainties in Germany as well as worries about sluggish

growth in the region.

Annegret Kramp-Karrenbauer, who had been long expected to

succeed Chancellor Angela Merkel next year, earlier this week

gave up her bid to run for the top job, raising more concerns

about political stability in the euro zone's biggest economy.

Euro zone GDP data due later on Friday is expected show a

sluggish growth of 0.1% from the previous quarter.

Sterling jumped and so did UK bond yields as investors bet

on a higher-spending budget next month after British Prime

Minister Boris Johnson forced the resignation of Sajid Javid as

finance minister. Javid, known to have been at odds with Johnson's powerful

policy adviser Dominic Cummings over spending plans, was

replaced by Rishi Sunak, a Johnson loyalist.

The pound traded at $1.3045 GBP=D4 , after 0.65% gains on

Thursday.

The 10-year gilts yield jumped to a three-week high of

0.660% GB10YT=RR , bucking falling yields in most other major

bond markets.

The yen stayed in a familiar range in the past couple of

weeks and last traded at 109.86 yen JPY= .

Oil prices extended their week-old recovery on hopes that

the world's biggest producers would cut output more as demand

looks set to drop sharply due to the outbreak of coronavirus.

The International Energy Agency (IEA) expects oil demand in

the first quarter to fall for the first time in 10 years.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were

up 0.12% at $51.48 per barrel in early Friday trade but up 2.3%

on the week, on course to post their first weekly gains in six

weeks.

(Editing by Sam Holmes & Simon Cameron-Moore)