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

Published 14/02/2020, 10:09
© Reuters.  GLOBAL MARKETS-European shares scale 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 ahead of GDP data

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

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

(Change byline, dateline; releads top, updates price

throughout)

By Tom Wilson and Hideyuki Sano

LONDON/TOKYO, Feb 14 (Reuters) - European shares touched

record highs on Friday as investors digested whether China's

coronavirus outbreak would cause long-lasting damage to global

economy.

Europe's broad Euro STOXX 600 .STOXX clawed up 0.1% to

follow Asian markets higher in choppy early trading, even as

indexes in Paris .FCHI and London .FTSE both fell 0.2%.

In both cases, corporate results weighed, with a 5% fall for

AstraZeneca AZN.L dragging London shares down as the drugmaker

said it would take a hit from the coronavirus outbreak.

France's Renault RENA.PA , meanwhile, fell 4.2% on its

first loss in 10 years as it 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.

The virus outbreak 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.

Yet there is by no means a consensus that such a sunny take

is warranted. Some investors said they were dialing 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. Wall Street futures EScv1 were

pointing to a slighly higher open.

Earlier, Asian shares had earlier inched higher 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 ticked up 0.2% for weekly gain of 1.8%, while

China's blue-chip CSI300 shares .CSI300 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. Factories are

starting to reopen albeit with some delays," said Yukino Yamada,

senior strategist at Daiwa Securities.

EURO BLUES

Currency traders had matters beyond the cornovairus on their

minds.

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

with worries lingering about slowing growth in the euro zone and

rising political uncertainties in Germany.

The single currency has lost 1% so far this week and is on

track for its worst two-weekly performance since mid-2018, with

investors watching out for an estimate of how the economy

performed in the fourth quarter, due at 1000 GMT.

Euro zone GDP data due later on Friday is expected show a

sluggish growth of 0.1% from the previous quarter.

The euro fell to as low as $1.0827, and last stood flat at

$1.0830 EUR=EBS .

Others signalled 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. It has risen 1.8% so far this month.

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 15 cents at $56.49 a

barrel. Brent is 3.7% higher for the week, the first increase

since the week of Jan. 3.

For Reuters Live Markets blog on European and UK stock

markets, please click on: LIVE/

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