* MSCI All-Country World index enters bear market
* European shares hit lowest in nearly 4 years
* Oil slumps, gold sinks, bitcoin plunges 25%
* U.S. stock futures down, VIX hits highest since 2008
By Ritvik Carvalho
LONDON, March 12 (Reuters) - Global stocks plunged into a
bear market and oil slumped on Thursday after U.S. President
Donald Trump banned travel from Europe to stem the spread of
coronavirus, threatening more disruption to the world economy.
With the pandemic wreaking havoc on the daily life of
millions, investors were also disappointed by the lack of broad
measures in Trump's plan to fight the virus, prompting traders
to bet on further aggressive easing by the U.S. Federal Reserve.
"He (Trump) did not announce any new concrete measures such
as a large-scale payroll tax cut to buffer the economy against
the impending coronavirus slowdown," said Jeffrey Halley, senior
market analyst at OANDA.
"That has probably disappointed markets more than anything."
European shares .STOXX plummeted to their lowest in almost
four years, with the benchmark STOXX 600 index falling 6% by
midday in London. Travel and leisure stocks shed 9.9%, hitting
their lowest in more than six years. .SXTP
The falls pushed the MSCI All-Country World Index
.MIWD00000PUS , which tracks stocks across 49 countries, into
bear market territory, down 20% from its 52-week peak.
The index was down over 2% on the day.
Investors also rushed into safe-haven assets, from bonds to
gold to the yen and the Swiss franc. Bitcoin plunged 25%, amid
wild volatility in cryptocurrency markets. BTSP=BTC
U.S. S&P 500 futures ESc1 plummeted as much as 5% in
European trading hours, a day after the S&P 500 .SPX lost
4.89%, leaving the index on the brink of entering bear market
territory, defined as a 20% fall from a recent top.
The VIX volatility index .VIX -- Wall Street's "fear
gauge" -- and an equivalent measure of volatility for the Euro
Stoxx 50 .V2TX hit their highest levels since the 2008
financial crisis.
Japan's Nikkei .N225 crumbled 4.4% to a trough last seen
almost three years ago, while MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 5%.
Australian shares .AXJO plunged 7.4% to their lowest level
in more than three years while Seoul's Kospi .KS11 fell 4.8%
to 4-1/2-year lows, with massive selling prompting a brief trade
halt. Thai shares .SETI sank 10.8% to eight-year lows.
Trump announced on Wednesday the United States will suspend
all travel from Europe, except the United Kingdom and Ireland,
to the United States for 30 days starting on Friday. He said
trade will not be affected by the restrictions. Trump also announced some other steps, including instructing
the Treasury Department to defer tax payments for entities hit
by the virus.
"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."
In the money market, traders further raised expectations of
another U.S. rate cut, even after the Fed's emergency cut last
week.
Fed fund rate futures 0#FF: are now pricing in a large
possibility of a 1.0 percentage point cut, rather than 0.75, at
a policy review on March 17-18.
PANDEMIC
The World Health Organization (WHO) described the outbreak
as a pandemic for the first time on Wednesday. The highly infectious coronavirus that shut down most of
China for much of February is spreading rapidly in Europe and
increasingly in the United States, disrupting many corners of
life from education to sports, entertainment and dining.
Investors worry how much of an effect policies can have in
turning around the global economy given the restrictions on
daily life, travel and business.
A case in point was Britain, where the FTSE stock index
.FTSE hit near four-year lows on Wednesday as investors
doubted whether the $39 billion government spending plan and 0.5
percentage point Bank of England rate cut announced on Wednesday
would be enough to counter the shock from the outbreak.
The index fell even further on Thursday, down 5.75%.
The British pound last stood at $1.2722 GBP=D3 , down 0.6%
on the day.
Gold XAU= fell 0.6% to $1,624.16 per ounce but still stood
well below Monday's high above $1,700.
The 10-year U.S. Treasury yield fell to 0.6861% US10YT=RR
-- still above a record low of 0.318% touched on Monday. The
two-year yield US2YT=RR fell to 0.3898%, but stood well above
Monday's low of 0.251%.
In commodities, oil prices were also hit, compounded by an
intensifying price war between Saudi Arabia and Russia, on top
of fears of a sharp slowdown in the global economy.
U.S. West Texas Intermediate (WTI) crude CLc1 shed 6.06%
to $30.98 per barrel. Brent crude fell 6.5% to $33.46. LCoc1
Copper, seen as a gauge of global economic health because of
its wide industrial use, fell to over three-year lows. MET/L
In the currency market, the dollar slid against the
safe-haven yen and Swiss franc.
The U.S. currency fell 0.89% to 103.60 yen and lost 0.14% to
0.9366 francs CHF= .
The euro traded at $1.1243 EUR= , down 0.2% 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 on to small
and medium-sized firms.