* Stocks gains 1-2% after strong Chinese factory data
* Some signs virus infection rates slowing
* Many investors cautious about recent rally given lockdowns
* Oil price bounces off 18-year lows
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, March 31 (Reuters) - World stocks looked set to
close their worst quarter since 2008 on a brighter note on
Tuesday, as strong Chinese factory data held out hope for an
economic revival even as much of the rest of the world shut down
to fight the coronavirus.
Stocks have rallied since the start of last week but remain
down more than 20% for the quarter. European shares have had an
even worst time, suffering their worst three months since 1987.
But with trillions wiped off global markets in March and
policymakers responding with more than $10 trillion and counting
of fiscal and monetary stimulus packages, a semblance of calm
has returned this week.
Some analysts have been bold enough to call a bottom in
stocks and say the lows of early last week are unlikely to be
revisited.
European stocks rallied at the open. The Euro STOXX
.STOXXE gained 1.7%, France's CAC 40 .FCHI 1.15% and the
German DAX GDAX 2.08%. Britain's FTSE 100 .FTSE rose 1.8%.
That followed gains in Asia after China's official
manufacturing purchasing managers' index (PMI) rose to 52.0 in
March from a record-low 35.7 in February, topping forecasts of
45.0. Analysts cautioned that underlying activity probably
remained below par, since the improvement measured the net
balance of companies reporting an expansion or contraction, but
markets cheered the news.
S&P 500 futures rose 0.6% ESc1 , pointing to a stronger
open on Wall Street after a rally on Monday lifted the U.S.
index towards a 20% gain since the lows of last week.
Despite the more positive mood, not everyone is convinced
the current rally has legs.
"In spite of the significant sell-off of most
growth-oriented assets since mid-February, we are concerned
there is further downside ahead," said Salman Baig, an
investment manager at Unigestion.
"The violent market action should not be understated, but
the underlying cause – an accelerating pandemic requiring large
parts of the economy to shut down – is still with us."
The pace of coronavirus infections globally was heading
towards 800,000. But Deutsche Bank analysts noted that for two
consecutive days the global growth in new cases was 10%, after
being well above that for most of the past two weeks.
Health officials are much more cautious. A World Health
Organisation official warned on Tuesday that even in the
Asia-Pacific region the epidemic was "far from over".
"This is probably the most embarrassing statistic for the
West that China could possibly release. Not only did China stop
the virus with just 3,309 deaths, they also appear to have done
it with just a one-month shutdown of the economy," Charlie
Robertson, the chief economist at Renaissance Capital, said on
Twitter.
Some analysts dispute China's figures, however.
OIL BOUNCES
Elsewhere, oil prices rose off the 18-year lows hit on
Monday after the United States and Russia agreed to talks to
stabilise energy markets.
Oil prices have been hit by a double whammy, with U.S. crude
at one point falling below $20 a barrel on Monday, as the virus
outbreak cut demand worldwide and Saudi Arabia got into a price
war with Russia.
Brent crude LCOc1 was up 43 cents, or 1.9%, at $23.19 a
barrel, after closing on Monday at $22.76, its lowest finish
since November 2002. nL4N2BO131
U.S. crude Clc1 was up $1.21, or 6.0%, at $21.30 a barrel,
after settling in the earlier session at $20.09, its lowest
since February 2002.
The dollar rose for a second day, although the gains were
more controlled than the jumps of earlier this month that put
severe stress on funding markets for the U.S. currency.
The dollar, measured against a basket of currencies, was up
0.3% at 99.493 =USD .
The euro dropped 0.4% to $1.0995 EUR=EBS . Sterling slipped
0.7% to $1.2330 GBP=D3 . The yen was 0.5% lower against the
dollar JPY=EBS .
Analysts say investors rebalancing their portfolios at
month-end and quarter-end were probably behind some of the
dollar's moves over the next 24 hours.
There was little respite for emerging-market currencies,
however. The South African rand ZAR= was near record lows and
Latin American currencies were falling once again.
Bond market moves were more measured than in recent weeks.
Italian government bond yields IT10YT=RR were steady before an
auction of debt, amid hopes the country's efforts to contain the
spread of the coronavirus may be starting to work.
German benchmark 10-year yields rose 5 basis points to
-0.474% DE10YT=RR . U.S. Treasury yields gained 2 to 4 bps, as
investors sold safer bonds and bought into equities.