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GLOBAL MARKETS-Stocks, oil hit by China virus fears, safe havens gain

Published 27/01/2020, 10:20
© Reuters.

© Reuters.

EUR/USD
0.00%
USD/JPY
-0.11%
XAU/USD
-0.52%
US500
-1.11%
DJI
-0.77%
JP225
1.77%
GC
-0.66%
LCO
0.00%
ESH25
-1.08%
CL
0.92%
IXIC
-1.49%
US10YT=X
0.22%
MIAPJ0000PUS
-0.04%
MIWD00000PUS
0.00%
SXPP
0.27%
1575
0.00%

* European shares slump at open

* Yen, Treasury notes in demand

* Many Asian markets closed for new year holiday

* MSCI All Country World Index hits two-week low

By Ritvik Carvalho

LONDON, Jan 27 (Reuters) - World shares fell to their lowest

in two weeks on Monday as worries grew about the economic impact

of China's spreading coronavirus with demand spiking for

safe-haven assets such as Japanese yen and Treasury notes.

The death toll from the coronavirus outbreak in China rose

to 81 and the virus spread to more than 10 countries, including

France, Japan and the United States. Some health experts

questioned whether China can contain the epidemic. The MSCI All-Country World Index .MIWD00000PUS , which

tracks shares across 47 countries, was down 0.42% to its lowest

since Jan. 13.

In Europe, stock markets slumped at the start of trading,

tracking their counterparts in Asia. The pan-European STOXX 600

index fell 1.4% to its lowest level since Jan. 14. .EU

Shares of mining companies .SXPP slumped 3.1%, dragged

down by their exposure to China, the biggest decline among the

major European subsectors.

"The coronavirus is an economic and financial shock. The

extent of that shock still needs to be assessed, but it could

provide the spark for an arguably long-overdue adjustment in the

capital markets," Marc Chandler, chief market strategist at

Bannockburn Securities, told clients.

In Asia, Japan's Nikkei average .N225 slid 2.0%, the

biggest one-day fall in five months. A Tokyo-listed China proxy,

ChinaAMC CSI 300 index ETF 1575.T , fell 2.2%. Many markets in

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Asia were closed for the lunar new year holiday.

U.S. S&P 500 mini futures ESc1 were last down 0.9%, after

falling 1.3% in early Asian trade.

The ability of the coronavirus to spread is getting stronger

and infections could continue to rise, China's National Health

Commission said on Sunday. Nearly 2,800 people globally have

been infected and 81 in China killed by the disease.

China announced it will extend the week-long new year

holiday by three days to Feb. 2 and schools will return from

their break later than usual. Chinese-ruled Hong Kong said it

would ban entry to people who have visited Hubei province in the

past 14 days. "With most Asian markets closed, fast-money investors are

buying risk-off hedges like Treasuries and selling the Nikkei,"

said Masahiko Loo, portfolio manager at Alliance Bernstein.

"I think this would continue this week, until China markets

resume trading next week and the coronavirus outbreak subsides."

MSCI's broadest index of Asia-Pacific shares outside Japan

.MIAPJ0000PUS was off 0.45%, although markets in China, Hong

Kong, Taiwan, South Korea, Singapore and Australia were closed

on Monday.

All three major Wall Street indexes closed on Friday, with

the S&P 500 seeing its biggest one-day percentage drop in over

three months. The S&P 500 .SPX lost 0.9%, the Dow Jones Industrial

Average .DJI 0.6% and the Nasdaq Composite .IXIC 0.9% after

the Centers for Disease Control and Prevention confirmed a

second case of the virus on U.S. soil. U.S. Treasury prices advanced, pushing down yields. The

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benchmark 10-year note's US10YT=RR yield fell to a

three-and-half-month trough of 1.627%.

Elsewhere in bonds, the Italian 10-year yield fell to a

three-month low Monday after right-wing leader Matteo Salvini

failed in his bid to overturn decades of leftist rule in the

northern region of Emilia-Romagna on Sunday. GVD/EUR

In the currency market, the Japanese yen strengthened as

much as 0.5% to 108.73 yen per dollar JPY= , its

two-and-a-half-week high.

The euro EUR= last stood at $1.1031 to the dollar, up from

its eight-week low of $1.1019 on Friday.

The offshore yuan CNH=D3 dropped more than 0.5% to 6.9776

against the dollar, its weakest since Jan. 6.

The coronavirus outbreak also pressured oil and other

commodity prices.

U.S. West Texas Intermediate crude futures CLc1 plummeted

3.8% to a three-and-a-half-month low of $52.15. Brent LCOc1

shed more than 3% to a three-month low of $58.68 per barrel.

"Investors will react quickly to any sign of negativity and

this is no exception as China announces that the issue has

become an emergency. This could keep oil prices fragile until

the coronavirus shows signs of slowing down," said Mihir

Kapadia, chief executive at Sun Global Investments.

Spot gold XAU= rose as much as 1.0% to $1,585.80 per

ounce, the highest level since Jan. 8, as the coronavirus

outbreak pushed up demand for the safe-haven metal. GOL

Daily cumulative cases of coronavirus JPG https://tmsnrt.rs/2Rgj92F

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