* Asian shares hit lowest level since early 2019
* U.S. stock futures down more than 4.5%
* Markets expect ECB to cut rates despite side-effects
worries
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano
TOKYO, March 12 (Reuters) - Global shares crumbled on
Thursday after U.S. President Donald Trump stunned investors by
announcing a temporary travel ban from Europe in an effort to
curb the spread of the coronavirus, threatening more disruptions
to businesses and the world economy.
U.S. S&P500 futures ESc1 dived 4.7%, a day after the S&P
500 .SPX lost 4.89%, putting the index firmly in a bear market
territory, defined as a 20% fall from a recent top.
Euro Stoxx 50 futures STXEc1 sank 5.8% to their lowest
levels since mid-2016.
"The travel ban from Europe has definitely taken everyone by
surprise," said Khoon Goh, head of Asia Research at ANZ in
Singapore.
"Already we know the economic impact is significant, and
with this additional measure on top it's just going to multiply
the impact across businesses. This is something that markets had
not factored in...it's a huge near-term economic cost."
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS lost 4.1% to its lowest level since early 2019,
while Japan's Nikkei .N225 dropped 5.3%.
Australia's benchmark .AXJO dived 7.4% while South Korea's
Kospi .KS11 fell 4.6% to a 4-1/2-year low.
Trump announced on Wednesday the United States will suspend
all travel from Europe, except from the United Kingdom, to the
United States for 30 days starting on Friday. Howevrr, Trump
said trade will not be affected by the restrictions.
He also announced some other steps, including instructing
the Treasury Department to defer tax payments for entities hit
by the virus.
"For those who had been hoping for measures to offset likely
fall in consumption, it was a disappointment," said Hirokazu
Kabeya, chief global strategist at Daiwa Securities. "There was
no talk of payroll tax cuts."
Investors worry whether the stimulus steps can quickly turn
around the global economy as concerns grew that the number of
infections could quickly snowball in many countries.
"In many European countries, the number of patients are
increasing in a track similar to Italy. The U.S. appears to be
following that path. It now looks realistic to expect, within 10
days, those countries could have more than ten thousands
patients."
Safe-haven assets were back in favour, though many of them
were still below recent peaks, which some market players suspect
reflects a desperate bout of profit-taking to make up for losses
suffered elsewhere.
Gold XAU= edged up 0.5% to $1,642.5 per ounce but still
stood well below Monday's high above $1,700.
The 10-year U.S. Treasuries yield fell 8.7 basis points to
0.737% US10YT=RR , though it is still more than 40 basis points
above a record low of 0.318% touched on Monday. Some analysts
say the rise could reflect worries about an increase in
government spending for stimulus.
The two-year yield US2YT=RR fell 4 basis points to 0.458%,
but stood well above Monday's low of 0.251%.
Fed fund rate futures 0#FF: , however, are still pricing in
a rate cut of at least 0.75 percentage points and about a 50%
chance of a 1.0 percentage point cut at a policy review on March
17-18.
"The initial reaction in financial markets shows that even
after Trump spoke investors feel they need to avoid risk" said
Junichi Ishikawa, senior currency strategist at IG Securities in
Tokyo.
"Trump has outlined what he considered to be tough measures,
but movements in stocks, stock futures, and currencies show that
this is not enough to ease investors' concerns. We are in a very
difficult situation now."
Oil prices extended losses as they were also hit by renewed
weakness in the stock market and as Saudi Arabia and the United
Arab Emirates announced plans to escalate the burgeoning price
U.S. West Texas Intermediate (WTI) crude CLc1 last traded
up slightly at $32.14 per barrel, down 2.5%.
In the currency market, the dollar slid against the
safe-haven yen and the Swiss franc.
The U.S. currency fell 1.1% to 103.35 yen and lost 0.6% to
0.9333 franc CHF= .
The euro traded at $1.1321 EUR= , up 0.5% ahead of the
European Central Bank's policy meeting later in the day.
The ECB is all but certain to unveil new stimulus measures,
including new, ultra-cheap loans for banks to pass onto small
and medium-sized firms. Markets have priced in a 10 basis point cut to its already
record low minus 0.50% policy rate though many policymakers have
said further cuts could be counterproductive because they hurt
bank margins to the point of thwarting lending.