* Pompeo says 'significant evidence' virus emerged from lab
* AUD, NZD hit one-week lows; stocks drop
* China, Japan on holidays
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook
SINGAPORE, May 4 (Reuters) - The dollar inched higher, stock
markets struggled for traction and oil dropped on Monday as a
U.S.-China spat over the origin of the coronavirus put the
brakes on optimism about an economic re-start as countries
around the world ease restrictions.
In thinned trade, with China and Japan on holiday, U.S.
stock futures ESc1 were last down 0.7%. FTSE futures FFIc1
fell 0.6% and European shares seemed set to return from a May
Day break with a slump. EuroSTOXX 50 futures STXEc1 fell 3%.
U.S. crude CLc1 snapped three sessions of gains with a 6%
drop and the safe-haven U.S. dollar rallied to one-week highs
against the risk sensitive Australian and New Zealand dollars.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 2.5%, pulled down by Hong Kong where the
Hang Seng .HSI returned from a two-session holiday with its
biggest drop in six weeks. .HK
The moves extended a dour start in May which began on Friday
with bleak U.S. data and the threat of fresh trade-war
hostilities between the world's two biggest economies.
U.S. President Donald Trump and Secretary of State Mike
Pompeo added to worries with fresh efforts to pin blame for the
pandemic on China, where the new coronavirus outbreak is
believed to have originated. The latest salvo came from Pompeo on Sunday who said there
was "a significant amount of evidence" that the virus emerged
from a laboratory in the central Chinese city of Wuhan.
Pompeo did not provide evidence, or dispute a U.S.
intelligence conclusion that the virus was not man-made while
an editorial in China's Global Times said he was "bluffing,"
calling on the United States to present the evidence.
But Pompeo's comments double down on Washington's pressure
on China as U.S. deaths and economic damage mount.
An editorial in China's Global Times said Pompeo did not
have any evidence the virus came from the lab in Wuhan and that
he was "bluffing," calling on the United States to present the
evidence.
"The risk of a pullback has increased this week," said Chris
Weston, head of research at Melbourne brokerage Pepperstone.
"The United States is not alone in publicly taking aim at
China, but whether it's Trump, Kudlow or Pompeo the narrative is
more frequent, and traders are selling yuan," he said.
With Chinese markets shut on the mainland, offshore yuan
shot out to a six-week low of 7.1560 per dollar before clawing
back to flat CNH= by mid-session.
The Australian dollar AUD=D3 dropped below the 64-cent
mark for the first time in a week, falling 0.5% to $0.6385.
Futures for benchmark U.S. 10-year Treasuries TYc1 were
unmoved at an implied yield of 0.50%, as demand for safe-haven
assets was firm. Gold XAU= rose back to $1,700.00 per ounce.
GOL/
BLAME GAME
An increase in tension between Washington and Beijing comes
as the pandemic wallops the world economy.
Asia's factory activity was ravaged in April, business
surveys showed on Monday, and the outlook dimmed further as
restrictions on movement to contain the coronavirus outbreak
froze global production and slashed demand. In the United States, manufacturing plunged to an 11-year
low last month, consumer spending has collapsed and some 30.3
million Americans have filed claims for unemployment.
"Trump is looking to get re-elected," said Nomura's joint
head of APAC equity research Jim McCafferty, likening his
attacks on China to "Japan-bashing" by then-president Ronald
Reagan in the 1980s.
"We've seen this before," he said. "And I think as
governments around the world become increasingly domestically
focused...finding a villian elsewhere makes a lot of sense."
That means a challenge for investors looking for income
which seems to have, for now, stumped even billionaire Warren
Buffett. Buffett's firm, Berkshire Hathaway BRKa.N , made an almost
$50 billion loss in the first quarter, but ended it with a
record cash pile and nothing to spend it on.
Buffett said he remains keen on making a big acquisition,
but has not provided financial support to companies as he did
during the 2008 financial crisis because he saw nothing
attractive enough.
Elsewhere in currency markets, the safe-haven yen JPY=
rose 0.2% to 106.72 per dollar while the euro, pound and New
Zealand dollar slipped in trade considerably lightened by the
"Golden Week" holiday in Japan, which runs until trade resumes
on Thursday.
In commodity markets, U.S. crude futures recovered from
early lows but were kept under pressure by worries about oil
oversupply and crumbling demand, even as some U.S. states and
cities start to ease coronavirus pandemic restrictions. O/R
West Texas Intermediate crude Clc1 futures last sat at
$18.74 per barrel, down $1, while Brent futures LCOc1 were
down 1%, or 27 cents, at $26.22.
The U.S. April jobs report will be released on Friday, but
some analysts say it may not fully reflect how many people have
been thrown out of work.
(Editing by Kim Coghill and Jacqueline Wong)