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GLOBAL MARKETS-European shares hit record even as coronavirus shows no signs of peaking

Published 14/02/2020, 13:10
© Reuters.  GLOBAL MARKETS-European shares hit record even as coronavirus shows no signs of peaking
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* Euro STOXX 600 hits record highs

* Scant consensus on market impact of coronavirus

* Hopes of government stimulus support shares globally

* Mainland China shares have recovered most of virus-caused

losses

* Euro falls to 3-year low

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

* Graphic on coronavirus https://tmsnrt.rs/3aIRuz7

(Updates prices throughout; adds BofA flows data)

By Tom Wilson

LONDON, Feb 14 (Reuters) - Stock markets across the world

ticked higher on Friday, even as investors debated whether

China's coronavirus outbreak would cause long-lasting damage to

the global economy.

Europe's broad Euro STOXX 600 .STOXX hit a record high,

gaining 0.2% to mirror gains in Asia after a choppy start to the

Indexes in London .FTSE and Frankfurt .GDAXI gained 0.2%

and 0.3% respectively, with the former moving higher after

AstraZeneca AZN.L shares turned positive. The drugmaker had

earlier fallen 5% after it said it would take a hit from the

coronavirus outbreak. It was a similar picture in Paris .FCHI , which clawed back

some early losses as Renault RENA.PA shares turned positive.

It was last down 0.2%.

Renault had dropped over 4% on its first loss in 10 years as

the car company set a lower operating margin goal for 2020, a

crunch year for its planned reboot alongside partner Nissan

after a scandal surrounding former boss Carlos Ghosn.

Wall Street futures EScv1 pointed to a slightly higher

open.

The Chinese virus outbreak has showed no sign of peaking,

with health authorities reporting more than 5,000 new cases.

China's National Health Commission said it had recorded 121 new

deaths on the mainland on Feb. 13, taking the accumulated total

infected to 63,851 people. Yet some investors are betting that the economic impact of

the outbreak will not be long-lasting, finding succour in a

spread beyond China that is not as rapid as feared.

Others have latched on to the possibility of further central

bank stimulus measures in response to any slowdown. China's

central bank, for example, has already pumped liquidity into its

economy.

But some investors said they were dialling down bets on

equities amid the uncertainty over what economic toll the

coronavirus would take.

"We have actually taken some money out of equities this

week," said Rory McPherson, head of investment strategy at

Psigma Investment Management, adding that it was temporarily

holding cash instead.

"Markets have been overly focused on the good, and not

giving a balanced view on whether the stimulus from China isn't

effective, and if the coronavirus spreads and impacts the

economy more."

MSCI world equity index .MIWD00000PUS , which tracks shares

in 49 countries, was flat.

Earlier, Asian shares had earlier risen towards their 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 rose 0.1% for a weekly gain of almost 2%.

China's blue-chip CSI300 shares .CSI300 , meanwhile, rose 0.7%,

having staged a stunning recovery to claw back 95% of their

losses made after the outbreak.

"China is already easing its monetary policy and providing

more liquidity while more stimulus is likely," said Yukino

Yamada, senior strategist at Daiwa Securities.

In its weekly number crunch of markets, analysts at BofA

said there had been a record $23.6 billion pumped into bond

funds over the last week and big inflows into almost everything

else as well. They also spotted that an interest rate cut in Mexico on

Thursday had chalked up the 800th cut by global central banks

since the collapse of Lehman Brothers in September 2008. That

works out roughly one every five days on average.

EURO BLUES

In currency markets, traders had other matters than the

cornoavirus on their minds.

The euro EUR=EBS slumped to another near-three-year low,

with worries lingering about slowing growth in the euro zone and

rising political uncertainties in Germany.

Euro zone growth slowed as expected in the last quarter of

2019 as French and Italian GDP shrank but employment growth

picked up more than expected, official estimates showed.

The euro did not waver on the numbers, having earlier fallen

to as low as $1.0827.

The single currency last stood flat at $1.08390. It has lost

1% so far this week and is on track for its worst two-weekly

performance since mid-2018.

Others market players noted growing demand for the U.S.

dollar.

"Investors will surely avoid Asia for the time being and

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

from the region," said Norihiro Fujito, chief investment

strategist at Mitsubishi UFJ Morgan Stanley Securities.

Against a basket of currencies, the dollar .DXY hit a

four-month high and was last at 99.115. It has risen 1.8% so far

this month. The U.S. currency has been trampling everything in

its path, including emerging market currencies.

Brazil's real BRL= has hit a record low forcing its

central bank to intervene to prop it up, while Turkey's lira

TRY= has crumpled to a near nine-month low.

Oil edged higher and was on track for its first weekly gain

in six weeks, backed by expectations that producers will

implement deeper output cuts to offset slowing demand in China

caused by the coronavirus epidemic. Brent crude futures LCOc1

were up 85 cents at $57.19 a barrel.

For Reuters Live Markets blog on European and UK stock

markets, please click on: LIVE/

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