GLOBAL MARKETS-European shares jump and bond markets recover; February PMIs in focus

* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
* Reuters Live Markets blog: LIVE/

LONDON, March 1 (Reuters) - European shares jumped on Monday
and the bond market calmed, with yields dropping from their
recent spikes, while optimism about U.S. fiscal stimulus sent
oil prices higher.
After Asian stocks rallied overnight, European share indexes
opened higher, with the STOXX 600 up 1.7% at 0837 GMT .STOXX .
London's FTSE 100 .FTSE up 1.8% and Germany's DAX was up 1.3%
.GDAXI .
The MSCI world equity index, which tracks shares in 49
countries, was up 0.5%, recovering from the previous session's
multi-week low .MIWD00000PUS .
The much-anticipated $1.9 trillion COVID-19 relief bill was
passed in the U.S. House of Representatives on Saturday, and now
moves to the Senate. In the bond market, key yields fell from their recent highs.
The U.S. 10-year treasury yield was down around 4 basis
points at 1.4118% at 0837 GMT, having dropped from Thursday's
one-year high of 1.614% US10YT=RR .
Germany's benchmark 10-year Bund yield was down around 5
basis points, also below last week's spike DE10YT=RR .
Market participants have become wary in recent weeks that,
when economies re-open from their coronavirus lockdowns a
combination of massive government stimulus and pent-up consumer
demand will cause inflation to accelerate. "There is little doubt in my mind that central banks will
eventually lean quite hard against a sustained rise in yields,"
wrote Deutsche Bank strategist Jim Reid in a note to clients.
"They simply can't afford to see it happen with debt so
high."
Factory activity data for February is also in focus this
week, with European PMIs due throughout the morning.
Manufacturing in Japan grew at its fastest pace in more than
two years in February, as strong orders led to the first output
rise since the start of the pandemic. PACE
But China's factory activity grew at a slower pace than in
the previous month, missing market expectations, after COVID-19
related disruptions earlier in the year. Helping sentiment was news that deliveries of the newly
approved Johnson & Johnson JNJ.N COVID-19 vaccine should start
on Tuesday. "The outlook for equity markets remains positive for most of
2021," wrote Berenberg economists Kallum Pickering and Holger
Schmieding in a note.
"Although yields will likely rise further to at least 2.0%
for the US 10 year Treasury and 0.0% for German 10 year Bunds by
the end of 2021, the increase in yields will lag behind the
improvement in the outlook for nominal GDP growth and corporate
earnings," they said.
"We expect clear forward guidance by the Fed that it will
not taper its asset purchases until the labour market has healed
and a faster pace of ECB asset purchases if necessary."
Oil prices jumped, with Brent crude futures LCOc1 up 1.8%
and U.S. West Texas Intermediate (WTI) crude futures up 1.7%
CLc1 . Front-month prices for both contracts touched 13-month highs
last week.
The dollar rose, gaining 0.3% against a basket of currencies
by 0839 GMT =USD . The Australian dollar - which is seen as a
liquid proxy for risk appetite - recovered AUD=D3 .
Wall Street also looked set for a higher open, with S&P 500
futures up 1.2% EScv1 . Nasdaq futures were up 1.7% at 0841 GMT
NQc1 , suggesting a recovery for tech stocks.
"The (tech) sector has come under pressure from rising
yields, which tends to disadvantage growth sectors," wrote Mark
Haefele, UBS global wealth management's chief investment
officer, in a note to clients.
"Against this backdrop, we continue to favor cyclical parts
of the market, including small and mid-cap stocks, along with
emerging market assets," he said.
"But we do not expect the tech sell-off to extend much
further and continue to see value in the sector for longer-term
investors."

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Emerging markets http://tmsnrt.rs/2ihRugV
Global asset performance http://tmsnrt.rs/2yaDPgn
Germany 10-year https://tmsnrt.rs/3sEKmfo
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