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GLOBAL MARKETS-Shares drop, gold surges as investors scurry for safety

Published 24/02/2020, 03:24
© Reuters.  GLOBAL MARKETS-Shares drop, gold surges as investors scurry for safety
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(Adds European stock futures, Chinese shares, analyst comment)

* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* MSCI ex-Japan extend losses, Japan closed for public

holiday

* E-mini futures for S&P500 fall more than 1% in Asia

trading

* Gold prices surge to highest since 2013

* South Korea on high alert after virus cases surge to over

* Coronavirus has killed 2,442 people in China

By Swati Pandey

SYDNEY, Feb 24 (Reuters) - Global shares and oil slid on

Monday while safe-haven gold surged as the spread of the

coronavirus outside China darkened the outlook for world growth

with infections and deaths rising in South Korea, Italy and the

Middle East.

South Korea put the country on high alert while the number

of infections jumped to over 700 and deaths rose to seven. In

Italy, officials said a third person infected with the flu-like

virus had died, while the number of cases jumped to above 150

from just three before Friday. Iran, which announced its first infections last week, said

it had confirmed 43 cases and eight deaths, with most of the

infections in the Shi'ite Muslim holy city of Qom. Saudi Arabia,

Kuwait, Iraq, Turkey and Afghanistan imposed travel and

immigration restrictions on the Islamic Republic.

In a sign of panic, U.S. stock futures were sold with

E-minis for the S&P500 ESc1 falling 1.2% in early Asian trade

while Nikkei futures NKc1 slipped over 2%. EuroStoxx 50

futures declined 1.5% while futures for London's FTSE FFIc1

skidded 1%.

Asian share indexes were also a sea of red.

Australia's benchmark index slid 2.2% while New Zealand was

about 1.3% lower. .AXJO .NZ50

South Korea's KOSPI index .KS11 fell about 3%. Chinese

shares opened down with the blue-chip CSI300 index .CSI300

easing 0.6%.

That left MSCI's broadest index of Asia-Pacific shares

outside Japan .MIAPJ0000PUS off 1.6% at its lowest since early

February. Japanese markets were closed for a public holiday.

"There is lots of bad news on the coronavirus front with the

total number of new cases still rising," AMP chief economist

Shane Oliver wrote in a note.

"Of course, there is much uncertainty about the case data,

new cases outside China still looks to be trending up and the

economic flow on has further to go with the Chinese economy

likely to have contracted in the March quarter."

The virus has killed 2,442 people in China, which has

reported 76,936 cases, and slammed the brakes on the world's

second largest economy.

It has spread to some 28 other countries and territories,

with a death toll of around two dozen, according to a Reuters

tally. Economists have roundly downgraded growth forecasts for

China as well as the world as travel restrictions and lockdowns

have already hit tourism, supply chain and factory output in a

number of countries.

Oxford Economics estimated world economic output growth

would fall to nearly zero in the first half of 2020 if the

coronavirus outbreak became a global pandemic.

"MESSY DATA RELEASES"

As investors wagered central banks would step in with policy

stimulus to support economic growth U.S. Fed fund futures

0#FF: surged signalling more rate cuts later this year.

In response, the dollar fell for a second straight session

on Monday against the yen JPY= to be last at 111.48.

The dollar's losses began on Friday after data showed

American business activity stalled in February, signalling a

contraction for the first time since 2016. The manufacturing

sector also clocked its lowest reading since August. "The data was a wake-up call for the U.S. equity market,

hitherto complacent about the impact of the virus," NAB currency

strategist Rodrigo Catril said, adding it "was probably too

early to throw the towel" on the greenback.

Despite losses since Friday, the greenback rose 1.7% last

week and is still up 2.7% so far this year.

"We are likely entering a period of messy and potentially

misleading data releases," Catril said.

"The U.S. had a bad data day, but we think that is just a

taste of what is yet to come with other major economies likely

to show bad economic numbers too."

The Australian dollar, considered a liquid proxy for China

plays, was down 0.3% as it languished near an 11-year low.

The euro EUR= eased a tad to $1.0828.

That left the dollar index =USD slightly higher at 99.489.

Analysts expect the Korean won to stay on its downward

spiral against the dollar as one of the favourite risk proxies

for investors. KRW=

The won has fallen more than 4.5% on the dollar so far this

year. KRW= It was last down 0.9% at 1,217.33 after hitting its

weakest since August 2019.

In commodities, oil prices slid as investors fretted about

crude demand being pinched by the impact of the coronavirus

outbreak, while leading producers appeared to be in no rush to

curb output.

Brent crude LCOc1 slumped 3%, or $1.77, to $56.72 a barrel

while U.S. crude CLc1 dropped 2.7%, or $1.48, to $51.9 a

barrel.

U.S. gold futures GCcv1 climbed 1% to $1,665.1 an ounce.

Spot gold XAU= jumped to a seven-year high of 1,678.58 after

marking its biggest weekly gain last week since early August.

Asia stock markets https://tmsnrt.rs/2zpUAr4

Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA

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(Editing by Sam Holmes)

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