* Hopes of central bank stimulus lift global shares
* ECB says stands ready to take targeted measures
* G7 conference call planned later on Tuesday
* Australia seen cutting rates
By Hideyuki Sano
TOKYO, March 3 (Reuters) - Global shares and oil prices
extended their rebound on Tuesday on mounting speculation
policymakers around the world would move to ease the economic
fallout from the spreading coronavirus.
The European Central Bank on Monday joined the chorus of
central banks signalling a readiness to deal with the growing
threats from the outbreak. Earlier messages from the U.S. Federal Reserve that it was
prepared to act weighed on the greenback against a basket of
currencies.
The improved confidence supported U.S. S&P 500 futures
ESc1 , which rose 0.5% in early Asian trade on Tuesday, a day
after the S&P 500 .SPX gained 4.60%, the biggest gain since
December 2018.
Japan's Nikkei .N225 jumped 1.6% while MSCI's broadest
index of Asia-Pacific shares outside Japan .MIAPJ0000PUS
gained 0.8%.
South Korea's Kospi .KS11 added 2.4% and Australian shares
.AXJO advanced 1.8% ahead of an expected rate cut by the
Reserve Bank of Australia.
The rout in global stocks last week had already prompted Fed
Chair Jerome Powell and Bank of Japan Governor Haruhiko Kuroda
to flag a readiness to move.
Money market pricing shows traders now expect a 100% chance
of a 0.25 percentage point cut to the current 1.50%-1.75% target
rate at the Fed's March 17-18 meeting as well as a 0.10
percentage point cut to the ECB's key rate at March 12 meeting.
G7 finance ministers are also expected to hold a conference
call on Tuesday (1200 GMT), sources said, to discuss measures to
deal with the economic impact of the coronavirus outbreak.
"There are hopes that G7 countries will take some sort of
coordinated actions to fight the virus, possibly including
fiscal spending," said Masahiro Ichikawa, senior strategist at
Sumitomo Mitsui DS Asset Management.
The frantic moves by policymakers reflected growing fears
that the disruption to supply chains, factory output and global
travel caused by the new epidemic could deal a serious blow to a
world economy trying to recover from the U.S.-China trade war.
Coronavirus is now spreading much more rapidly outside China
than within the country, leading the world into uncharted
territory, although the World Health Organization (WHO) has so
far stopped short of calling it a pandemic. In the United States, six people in the Seattle area have
died of the illness caused by the new coronavirus, as
authorities across the country scrambled to prepare for more
infections. RETURNS
The rebound in global stock prices saw U.S. bond yields roll
back some of their sharp falls.
The 10-year U.S. Treasuries yield retreated to 1.155%
US10YT=RR from a record low of 1.030% marked on Monday. The
rate-sensitive two-year notes yield US2YT=RR jumped back to
0.903% from Monday's 3 1/2-year low of 0.710%.
Still, the 10-year and two-year yields are down about 40 and
50 basis points, respectively, from about two weeks ago.
April Fed funds rate futures FFJ0 still price in about 80%
chance of a 0.50 percentage point cut.
Expectations of Fed rate cuts prompted investors to cut
their exposure to the dollar.
Against the yen, the dollar traded at 108.31 yen JPY= , off
a five-month low of 107 set on Monday.
The euro stood at $1.1139 EUR= , having hit an eight-week
peak of $1.1185.
The Australian dollar fetched $0.6533 AUD=D4 , about a cent
above an 11-year low of $0.64345 set on Friday. Australia's
central bank is widely expected to cut the policy interest rate
to 0.5% from 0.75%, already at a record low.
Oil prices bounced back further after a jump of more than 4%
on Monday, reversing an early decline to multi-year lows.
Hopes of a deeper output cut by the Organization of the
Petroleum Exporting Countries and central banks' policy measures
countered fears of slower growth.
U.S. West Texas Intermediate (WTI) crude futures CLc1 rose
2.7% to $48.01 a barrel, up sharply from Monday's low of $43.32
a barrel, which was the lowest since December 2018.
While the coronavirus continues to dominate investor
attention, focus has also swung to Super Tuesday in the United
States, the biggest day in the Democratic primary elections to
choose a challenger to President Donald Trump.