GLOBAL MARKETS-Oil and European shares rise as lockdowns ease; gold jumps

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* U.S. West Texas Intermediate crude hits two-month high
* Gold hits seven-year peak
* FTSE 100 and Stoxx 600 up 2%
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(Updates prices, adds context and comment)
By Elizabeth Howcroft
LONDON, May 18 (Reuters) - European stock markets rose on
Monday and oil prices climbed to their highest in as much as two
months as a loosening of coronavirus shutdowns boosted market
sentiment, even though the deadly outbreak has yet to be fully
contained.
Warm weather enticed much of the world to emerge from
coronavirus lockdowns as centres of the outbreak from New York
to Italy and Spain gradually lift restrictions that have kept
millions cooped up for months. However, the weekend also saw anti-lockdown protesters in
countries such as the United States, Germany, England and Poland
arguing government restrictions demolish personal liberties and
are wrecking economies. The pan-European STOXX 600 .STOXX was up 2% at 1020 GMT,
with heavyweight bourses in Britain .FTSE , Germany .GDAXI
and France .FCHI all comfortably in positive territory,
recovering some of last week's losses.
"The resilience of stock markets relative to the awful
economic data that we've been seeing over the past fortnight
speaks to an optimism that... as economies come out of lockdown
we can expect to see improvements as we head into the second
half of the year," said Michael Hewson, chief market analyst at
CMC Markets.
Governments must balance the economic incentive to re-open
businesses with the risk of triggering a deadly second wave of
the virus, which has killed more than 312,000 people and spread
to at least 210 countries since December. Deutsche Bank strategist Jim Reid said, "It does feel like
we're in the middle of a phoney war at the moment with all of us
waiting to see how efficiently the various economies are able to
re-open given all the social distancing that will be required."
There were still lots of obstacles to a rapid recovery, with
Federal Reserve Chairman Jerome Powell saying in an interview on
Sunday that a U.S. economic recovery may stretch deep into 2021.
The most important data for the U.S. economy now are the
"medical metrics" around the coronavirus pandemic, he said.
Health ministers from around the world, including China and
the U.S., are expected to call for an independent evaluation of
the World Health Organization's handling of the COVID-19
pandemic during a WHO meeting on Monday. Already rocky U.S.-China relations also saw tensions
increase over the weekend, as the United States raised threats
over telecoms equipment giant Huawei Technologies HWT.UL and
China's treatment of journalists in Hong Kong. U.S. lawmakers and officials are crafting proposals to push
American companies to move operations or key suppliers out of
China, including tax breaks, new rules, and carefully structured
subsidies. Japan's preliminary GDP data showed that the world's third
biggest economy contracted an annualised 3.4% in the first
quarter, slipping into a recession for the first time in more
than five years. But hopes of a worldwide economic recovery saw oil prices
climb by more than $1 a barrel on Monday, supported by output
cuts. Brent crude reached as much as $34.35 a barrel on Monday,
its highest since April 9, and was last up 5.3% at $34.22
LCOc1 . U.S. West Texas Intermediate crude CLc1 was up 7.1%
at $31.51 a barrel - a two-month high.
In commodity markets, the flood of liquidity from central
banks, combined with record-low interest rates and poor economic
data from the U.S., lifted gold to a seven-year peak. The metal
was last up 1.3% at $1,763 an ounce XAU= , with silver and
palladium also boosted. GOL/ The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was up around 0.4% while MSCI's main
European Index .MSER was up 2%.
Government bond yields edged higher across the euro area,
while France's bonds saw some underperformance after its ratings
outlook was lowered by Fitch Ratings. Europe's biggest budget airline, Ryanair, reported a 13%
rise in profit for the year to March 31 RYA.I , but cut its
annual passenger traffic target by a further 20% and said it had
"no visibility" on customer demand once it reopens much of its
network on July 1. Ryanair shares were last up 10.4%.
The dollar fell slightly against a basket of six major
currencies in early London trading before recovering somewhat,
last down less than 0.1% since New York's close .DXY .
The Norwegian crown was lifted by the rising oil prices, up
around 0.8% versus the euro EURNOK=D3 . Sterling fell below $1.21 - its lowest since March 26 - late
on Sunday after the Bank of England's chief economist said the
bank is looking more urgently at options such as negative
interest rates. It was last up 0.25% on the day at $1.2130, as a lack of
progress in Brexit negotiations continue to weigh on the pound.
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