GLOBAL MARKETS-Buoyed by company earnings, world markets look past virus

* Stock markets gain, China futures rebound

* Bond yields, oil rise; gold, yen stabilise

* Fed expected to signal on-hold stance

(Updates prices, adds charts)

By Sujata Rao

LONDON, Jan 29 (Reuters) - Global markets showed more signs

of stabilisation on Wednesday as investors looked past China's

coronavirus outbreak and moved back into shares from safe-haven

assets such as the yen and German bonds.

World stocks were flat, pulled down by a 3% fall in Hong

Kong .HSI , where trading resumed after the Lunar New Year

holiday. But they stand just 2% off recent record highs

.MIWD00000PUS following Tuesday's recovery on Wall Street and

gains across Europe.

A pan-European equity index .STOXX rose 0.5%, extending

Tuesday's 0.8% rise. Bank shares SX7P gained almost 1%, thanks

to upbeat results from Spain's Santander SAN.MC , and Swedbank

a day earlier .SX7P .

Equity futures suggest a stronger open for U.S. shares, with

the tech-heavy Nasdaq up 0.5% NQc1 ESc1 YMc1 .

Tuesday's rise was aided by robust earnings from Apple

AAP.L . Of the 104 U.S.companies to report results so far,

68.3% have exceeded expectations, and earnings expectations for

the quarter have been upgraded.

"The numbers look pretty solid at the start of the earnings

season," said Neil Campling, an equity analyst at Mirabaud. "But

there is obviously caution as further news comes out of China

regarding the coronavirus."

The S&P 500 remains 3% below record highs. Investors are

looking for earnings from 47 S&P 500 firms on Wednesday,

including Facebook, Boeing, General Electric, Microsoft,

McDonald's and AT&T.

Earlier, Chinese equity futures traded in Singapore SFCc1

rebounded from two days of losses to rise 1.79%, the biggest

gain in almost seven weeks. Mainland markets remained shut.

"There appears to be more transparency, communication in

terms of the virus, and that makes it easier to start assessing

the economic fallout. So the markets have taken some comfort

from that," said Rainer Guntermann, a rates strategist at

Commerzbank in Frankfurt.

He was comparing the coronavirus response with Beijing's

secretive stance during the 2003 outbreak of the SARS virus,

which enabled it to spread faster and claim more victims.

FEARS STILL LINGER

Risk aversion has not completely lifted. With the number of

coronavirus fatalities https://tmsnrt.rs/3aIRuz7 now at 132 and

6,000 cases reported worldwide, there are fears the outbreak

could inflict serious damage on Chinese growth, already at

three-decade lows.

A Reuters poll predicts Chinese manufacturing stalled in

January, after some recovery towards the end of 2019. Several

Hong Kong-listed firms warned of damage to profits, and Apple

CEO Tim Cook warned of supply chain disruptions.

In currencies, the offshore-traded yuan CNH=D3 was little

changed at 6.9620 per dollar but held off a one-month low

reached earlier this week. Australia's dollar, which fell to

three-month lows this week because of its trade and investment

links with China, rose 0.2% AUD=D3 .

The safe-haven yen was flat but stayed below two-week highs

touched on Monday JPY=D3 . The U.S. dollar index edged off

two-month highs .DXY .

The U.S. Federal Reserve meets later on Wednesday. No change

in rates is expected, but speculation has risen that the

coronavirus could lead the Fed to abandon its dovish stance.

Money markets predict a quarter-point rate cut this year and a

small chance of a second.

Fears of economic damage are reflected also in the U.S.

Treasury yield curve. Three-month yields briefly rose on Tuesday

above 10-year borrowing costs -- the curve inversion that sends

a fairly reliable recession signal.

As calm returns to markets, the curve has returned to

normal, however. Commerzbank's Guntermann said pricing rate cuts

at this stage was "ambitious".

Treasury 10-year yields were around 1.63%, off Tuesday's

three-month lows around 1.57% hit. German Bund yields also

inched higher US10YT=RR DE10YT=RR .

On commodity markets, crude oil futures rose for the second

day, after falling amid fears over economic growth and declines

in travel demand, with Brent crude up 1% on the day LCOc1 .

Gold, which had surged towards $1,600 an ounce on Monday,

subsided to around $1,560 XAU=

Market rebound https://tmsnrt.rs/2t3r6Pg

Tracking the novel coronavirus interactive https://tmsnrt.rs/3aIRuz7

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