(Adds U.S. market open, byline, dateline; previous LONDON)
* Wall Street rallies as Biden becomes front runner
* U.S. Treasury yields near record lows
* Euro STOXX 600 gains 1.0%
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Matt Scuffham
NEW YORK, March 4 (Reuters) - The dollar and world equity
markets rose on Wednesday as investors were cheered by a strong
showing by Joe Biden in the U.S. Democratic presidential
primaries, though an economy-weakening coronavirus outbreak kept
investors on tenterhooks, with bond yields falling.
Former Vice President Biden, considered less likely to raise
taxes and impose new regulations than rival Bernie Sanders,
rolled to victories across the South, Midwest and New England on
the biggest day of voting in the Democratic presidential
nomination campaign. That helped U.S. stock markets bounce back from declines on
Tuesday after investors deemed the U.S. Federal Reserve's
surprise 50-basis-point interest rate cut to be an inadequate
response to an epidemic that has so far killed more than 3,000
people worldwide and threatens to slow global growth.
Bonds held on to gains after Tuesday's rate cut.
The Fed's first off-schedule move since the 2008 financial
crisis came with comments highlighting both the scale of the
challenge and the limits of monetary policy but Biden's success
offered investors some respite. "Seeing Biden emerge as the frontrunner sets the stage for a
runoff in the autumn that pits two people who are not
anti-business," said Larry Hatheway, co-founder of research firm
Jackson Hole Economics, referring to President Donald Trump.
"The concern with Sanders would have been the regulation of
large swathes of American industry," he said.
The bounce offered investors the opportunity to rejig
portfolios to adapt to current market conditions while markets
are higher, Hatheway said, adding that he expects it will only
provide temporary respite.
"I don't think the market has bottomed. I think the market
will probably fall another 5% to 10%," he said. "We're going to
have to go lower because you've got a clear slowdown in activity
that's probably going to last through the first half."
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 1.01% and emerging market stocks rose 0.73%.
The pan-European STOXX 600 index .STOXX rose 1.00%, and
Wall Street strode higher.
The Dow Jones Industrial Average .DJI rose 471.67 points,
or 1.82%, to 26,389.08. The S&P 500 .SPX gained 45.24 points,
or 1.51%, to 3,048.61 and the Nasdaq Composite .IXIC added
120.03 points, or 1.38%, to 8,804.12.
The Euro STOXX 600 .STOXX gained 1.0%, on course for a
third straight days of gains.
The spread of the virus continued to impact companies and
financial institutions around the world. Lufthansa said it would
ground 150 aircraft out if its total fleet of around 770 due to
the virus and General Electric warned it would take a hit of
$300 million to $500 million. Private equity firm Blackstone's Chief Executive Stephen
Schwarzman said it "remained unclear" if the Fed's cut would
restore confidence. Some saw the Fed's extraordinary move as a decision to move
hard and early because it expected further economic damage from
the spread of the coronavirus.
"They have signaled willingness to take further action,
which is why we are seeing a further rally in bonds," said Tim
Drayson, head of economics at Legal & General Investment
management.
The benchmark 10-year U.S. Treasuries yield US10YT=RR ,
which falls when prices rise, held below 1% - not far over the
overnight low of 0.9060%. The yield has fallen for ten straight
days, its longest slide in at least a generation.
Benchmark 10-year notes US10YT=RR last rose 17/32 in price
to yield 0.9618%.
Euro zone bond yields also held near record lows on
Wednesday, with Germany's benchmark 10-year Bund yield
DE10YT=RR around -0.64%, near six-month lows set on Monday.
With safe-haven currencies in demand, the dollar clawed back
some ground from near five-month lows versus the yen JPY=EBS
and fell to its lowest against the Swiss franc CHF=EBS in
almost two years. It was flat against a basket of six major
currencies =USD .
The dollar index =USD rose 0.332%, with the euro EUR=
down 0.36% to $1.1131.
The Japanese yen weakened 0.20% versus the greenback at
107.37 per dollar.
Korean stocks .KS11 gained 2% on a $9.8 billion government
stimulus package to mitigate the coronavirus impact.
Coronavirus hits financial markets https://tmsnrt.rs/2TI8YnE
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