* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Fears over China virus recede somewhat
* Treasury yield rise shows risk appetite has improved
* Oil market eyes OPEC output cuts
By Stanley White
TOKYO, Jan 29 (Reuters) - Asian shares fell on Wednesday as
a spike in new Chinese virus cases sent Hong Kong stocks
tumbling and added to worries about the economic impact of the
outbreak.
But there were some signs that global financial markets may
be regaining their composure after days of heavy selling sparked
by the epidemic.
European futures STXEc1 rose 0.22% in early trading and
U.S. stock futures ESc1 were up 0.27%.
Chinese stock futures in Singapore SFCc1 rebounded from
two days of losses to rise 1.79%, the biggest gain in almost
seven weeks.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 0.41%.
But most of the losses were confined to Hong Kong shares
.HSI , which sank 2.4% on their first session after a
two-and-a-half trading day break for Lunar New Year, led by
declines in financial services, real estate, and consumer goods
companies as a growing number of firms warned they may take a
hit from the China virus. Japan's Nikkei stock index .N225 rose 0.62%, and
Australia's main index .XJO added 0.53%, partly because
investors in these markets had already had a chance to react to
the outbreak, which has claimed more than 100 lives.
Oil futures built on gains in Asia after OPEC sources said
the cartel wants to extend crude output cuts by three months to
June, easing concern about excess supplies.
U.S. Treasury yields remained higher and safe-haven
currencies held steady in a sign of some calm in financial
markets, but the focus remained squarely on the virus and how
investors would re-price riskier assets.
"The next three to five days will be maximum selling
pressure, because essentially markets had a benign view of the
virus before the Lunar New Year," said Sean Darby, global equity
strategist at Jefferies in Hong Kong.
"Until the rate of cases starts to peak, markets are not
likely to bounce."
The S&P 500 .SPX rose 1.01% on Tuesday, rebounding from
its worst daily decline in four months on Monday, as shares of
Apple Inc AAPL.O rose ahead of its fourth-quarter results.
After the market close, Apple reported better-than-expected
profits for the fourth quarter and forecast revenue in the
current quarter above Wall Street expectations, which lifted
some Asian tech shares. The yield on benchmark 10-year Treasury notes US10YT=RR
rose to 1.6545% versus a yield of 1.5821% on three-month
Treasury bills US3MT=RR in another sign that sentiment has
stabilised.
The yield curve briefly inverted on Tuesday when 10-year
yields fell below their 3-month counterparts for the first time
since October. An inverted yield curve has historically been an
indicator of looming recession. Some investors were on the sidelines before the U.S. Federal
Reserve meeting later on Wednesday. The Fed is expected to
reiterate its desire to keep rates unchanged at least through
this year, though some analysts wonder if it could be shaken off
autopilot if the virus outbreak deepens.
In currency markets, the safe-haven yen JPY=EBS was quoted
at 109.14 per dollar following a 0.2% loss on Tuesday. The Swiss
franc, another popular safe-haven, traded at 0.9742 versus the
dollar, close to its lowest in almost three weeks.
In the offshore market, the yuan CNH=D3 was little changed
at 6.9620 per dollar but was not far off a one-month low hit
earlier this week. China's onshore markets are closed for the
Lunar New Year holidays and will resume trading on Feb. 3.
U.S. crude CLc1 rose 1.25% to $54.17 a barrel. Brent crude
LCOc1 climbed 1.28% to $60.27.
OPEC wants to extend current oil output cuts until at least
June from March, with the possibility of deeper reductions on
the table if oil demand in China is significantly impacted by
the spread of the new coronavirus, OPEC sources said.
Sterling GBP=D3 edged lower to $1.3022, on course for its
fifth day of declines due to worries about Britain's trading
relationship with the European Union. Investors are also cautious ahead of a Bank of England
policy decision on Thursday, which many analysts say is too
close to call.