REFILE-GLOBAL MARKETS-Asian shares turn red as Hong Kong tumbles on China virus

(Corrects typographical errors in paragraphs 1, 3 and 8)
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Pessimism about China virus recedes
* Treasury yield rise shows risk appetite has improved
* Oil market eyes OPEC output cuts

By Stanley White
TOKYO, Jan 29 (Reuters) - Asian shares erased earlier gains
on Wednesday, swinging into negative territory as a spike in new
Chinese virus cases sent Hong Kong stocks tumbling and fuelled
fears about the economic impact of the outbreak.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS skidded 0.52%. Hong Kong shares .HSI fell 2.8%
on their first session after a two-and-a-half trading day break
for Lunar New Year, led by declines in financial services, real
estate, and consumer goods companies.
However, Australian shares .AXJO rose 0.57%, while Japan's
Nikkei stock index .N225 advanced 0.4%, partly because
investors in these markets have already had a chance to react to
the virus outbreak, which has claimed more than 100 lives.
Oil futures built on gains in Asia after OPEC sources said
the cartel wants to extend crude output cuts by three months to
June, easing concern about excess supplies.
U.S. Treasury yields remained higher and safe-haven
currencies held steady in a sign of some calm in financial
markets, but the focus remained squarely on the virus and how
investors would re-price riskier assets.
"The next three to five days will be maximum selling
pressure, because essentially markets had a benign view of the
virus before the Lunar New Year," said Sean Darby, global equity
strategist at Jefferies in Hong Kong.
"Until the rate of cases starts to peak, markets are not
likely to bounce."
U.S. stock futures ESc1 rose 0.14% in Asia on Wednesday.
The S&P 500 .SPX rose 1.01% on Tuesday, rebounding from its
worst daily decline in four months on Monday, as shares of Apple
Inc AAPL.O rose ahead of its fourth-quarter results.
After the market close, Apple reported better-than-expected
profits for the fourth quarter and forecast revenue in the
current quarter above Wall Street expectations, which lifted
some Asian tech shares. The yield on benchmark 10-year Treasury notes US10YT=RR
rose to 1.6666% versus a yield of 1.5821% on three-month
Treasury bills US3MT=RR in another sign that sentiment has
stabilised.
The yield curve briefly inverted on Tuesday when 10-year
yields fell below their 3-month counterparts for the first time
since October. An inverted yield curve has historically been an
indicator of looming recession. Markets in Asia are likely to be subdued before the U.S.
Federal Reserve meeting later on Wednesday. The Fed is expected
to reiterate its desire to keep rates unchanged at least through
this year.
In currency markets, the safe-haven yen JPY=EBS was quoted
at 109.22 per dollar following a 0.2% loss on Tuesday. The Swiss
franc, another popular safe-haven, traded at 0.9740 versus the
dollar, close to its lowest in almost three weeks.
In the offshore market, the yuan CNH=D3 was little changed
at 6.9615 per dollar. China's onshore markets are closed for the
Lunar New Year holidays. Markets will resume trading on Feb. 3.
U.S. crude CLc1 rose 0.99% to $54.01 a barrel. Brent crude
LCOc1 climbed 0.96% to $60.08 per barrel.
OPEC wants to extend current oil output cuts until at least
June from March, with the possibility of deeper reductions on
the table if oil demand in China is significantly impacted by
the spread of the new coronavirus, OPEC sources said.
Sterling GBP=D3 edged lower to $1.3021, on course for its
fifth day of declines due to worries about Britain's trading
relationship with the European Union. Investors are also cautious ahead of a Bank of England
policy decision on Thursday, which many analysts say is too
close to call.