GLOBAL MARKETS-European shares fall as investors take stock of spreading virus

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Ritvik Carvalho
LONDON, March 27 (Reuters) - European stocks fell on Friday,
halting their biggest ever three-day rally in a sign investors
were focusing once more on the spread of the coronavirus
pandemic despite hopes for further stimulus measures to combat
its economic impact.
The pan-European STOXX 600 index .STOXX was down almost 2%
in early deals.
The benchmark index has recovered almost 17% since hitting
its lowest since 2013 on March 16, but remains more than 26%
below last month's all-time high in a rout that has erased more
than $3 trillion from the value of European firms. .EU
Stock markets have rallied over the past week on the back of
trillions of dollars of enacted and pledged economic stimulus by
policymakers worldwide, from central banks to governments.
In Europe, where the pandemic is still far from contained,
policymakers have suspended state aid rules and limits on public
borrowing and approved $40 billion in emergency funds to help
airlines, among the hardest hit in the global emergency.
The losses came after stock markets rallied in Asia and Wall
Street overnight.
MSCI's All Country World Index .MIWD00000PUS , which tracks
stocks across 49 countries, was down 0.1% on the day.
E-Mini futures for the S&P 500 ESc1 reversed course and
fell 1.5% following three consecutive days of gains in the S&P
500 .SPX on Wall Street.
"Rallies don't last forever, and clearly investors are happy
to call time on this one as we head into another uncertain
weekend," said Craig Erlam, analyst at OANDA.
"We may have had a good run this week, but the weekend can
feel like a long time at moments like this, and the numbers
we're getting from the U.S., which now has more cases than China
or Italy, are getting uglier by the day."
The United States is now the country with the most
coronavirus cases, surpassing even China, where the flu-like
illness first emerged late last year.
Policymakers may need to offer more stimulus as the virus
slams the brakes on economic activity and increases healthcare
spending.
The U.S. House of Representatives is expected to pass a $2.2
trillion stimulus package that will flood the world's largest
economy with money to stem the damage caused by the pandemic.
The U.S. Federal Reserve has already slashed rates to zero
and launched quantitative easing. The Fed will also take the
unprecedented step of offering a direct backstop for corporate
loans. The number of Americans filing claims for unemployment
benefits surged to a record of more than 3 million last week as
strict measures to contain the virus pandemic ground the country
to a sudden halt, data showed on Thursday. The jobless blowout was announced shortly after Fed Chairman
Jerome Powell said the United States "may well be in recession",
an unusual acknowledgement by a Fed chair that the economy may
be contracting even before data confirms it. Global equity markets took the data in their stride, partly
as most central banks have already aggressively eased policy and
governments are backing this up with big fiscal spending.
"The big picture message is that an expanding Fed balance
sheet is correlated with a higher equity market," said Neil
MacKinnon, economist at VTB Capital in London.
Chinese shares .CSI300 , battered this month because of the
virus, rose 0.32% on Friday. Shares in South Korea .KS11 ,
another country hit hard by the pandemic, rose 1.87%.
Leaders of the Group of 20 major economies pledged on
Thursday to inject over $5 trillion into the global economy to
limit job and income losses from the coronavirus. MARKET
In the currency market, the greenback fell 0.61% to 108.94
yen JPY=EBS in Asia, on pace for a 2% weekly decline.
The index that measures the greenback against a basket of
peers was up 0.2% =USD on the day, although it was headed for
steep weekly declines against the Swiss franc CHF=EBS , pound
GBP=D3 , and euro EUR=EBS .
The U.S. currency's fall after two weeks of gains suggests
the Fed's efforts to relieve a crunch in the dollar funding
market are working, some analysts said.
The yield on benchmark 10-year Treasury notes US10YT=RR
fell to 0.7757%, while the two-year yield US2YT=RR edged up to
0.2790%.
Yields were headed for a weekly decline, taking cues from
the Fed's extraordinary steps to bolster markets and the huge
stimulus package.
U.S. crude CLc1 ticked up 0.66% to $22.74 a barrel, but
Brent crude LCOc1 fell 1.29% to $26. Energy markets have been
caught in a tug-of-war between falling fuel demand, hopes for
stimulus spending and worries about excess oil supplies. O/R
Gold, normally bought as a safe haven, was slightly lower.
Spot gold XAU= fell 0.8% to $1,616.11 per ounce. GOL/
Gold market participants remained concerned about a supply
squeeze after a sharp divergence between prices in London and
New York. The virus has grounded planes used to transport gold
and closed precious metal refineries.

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World stocks vs. COVID-19 confirmed cases https://reut.rs/2UEjBrT
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