* European stocks flat, wipe early losses
* Germany sees sudden spike in virus reproduction rate
* Dollar slips, Aussie rises in risk-on FX trade
* U.S. stock futures rise even as cases mount
* Hong Kong in focus after China reveals details of security
law
By Thyagaraju Adinarayan
LONDON, June 22 (Reuters) - World stocks reversed earlier
losses and the dollar slid on Monday as investors shrugged off
worries that rising coronavirus infections in parts of Europe
and the United States over the weekend could scupper a quick
economic rebound.
Torn between record stimulus and growing fears of a second
wave of infections, stocks .MIWD00000PUS have been moving
sideways in recent weeks after rising more than 40% from March
lows on hopes the worst of the pandemic was over.
European shares .STOXX opened lower but nudged into
positive territory as a jump in Germany's coronavirus
reproduction rate over the weekend was seen as unlikely to
trigger a massive second wave or new lockdowns. "Markets have climbed back ... with stocks proving the
doubter wrong yet again as a world of stimulus trumps the
reality of economic and health struggles," said Joshua Mahony,
senior market analyst at IG.
Germany's coronavirus reproduction rate jumped to 2.88 on
Sunday from 1.06 on Friday, health authorities said. The spike
in infections was mainly related to local outbreaks including in
North Rhine-Westphalia.
"I regard the German R statistic as a bit of a red herring
or more of a statistical quirk," said Chris Bailey, Raymond
James European strategist.
"Coronavirus at-the-margin remains an overhang but the
opening up of Europe still looks on much more solid foundations
than the US/Americas."
The pandemic is accelerating globally with the World Health
Organization reporting a record increase in global coronavirus
cases on Sunday. In further evidence that United States was far from
returning to normal, Apple AAPL.O said on Friday that it would
temporarily shut 11 U.S. stores as coronavirus cases rose in
some states.
The U.S. dollar meanwhile slipped from two-and-a-half-week
highs and stock futures ESc1 were up more than 1% as risk
appetite remained alive in a world awash with cheap money.
However, credit rating agency Moody's warned that the
stimulus measures will leave advanced economies with much higher
debt than they accumulated during the last financial crisis.
"Government debt/GDP ratios will rise by around 19
percentage points, nearly twice as much as in 2009 during the
GFC ... the rise in debt burdens will be more immediate and
pervasive, reflecting the acuteness and breadth of the shock
posed by the coronavirus." Moody's said.
HK WORRIES
Investors are also wary of developments in Hong Kong after
details of a new security law for the territory showed Beijing
will have overarching powers on its enforcement.
China's top legislative body, the National People's Congress
Standing Committee, will meet on June 28, and the Global Times
reported it was likely to enact the Hong Kong security law by
July 1. Hong Kong's Hang Seng .HSI fell 0.5%, underperforming
regional markets.
Japan's Nikkei .N225 fell 0.2% and MSCI's broadest index
of Asia-Pacific shares outside Japan .MIAPJ0000PUS was almost
flat.
In currency markets, the euro traded at $1.1214 EUR= ,
bouncing off three week lows. The yen was flat at 106.92 per
dollar JPY= .
The Aussie AUD=D3 was among the biggest risers, benefiting
from comments by the head of the country's central bank that the
currency's recent rise was not a problem and that the impact of
the COVID-19 pandemic would not be as bad as first feared.
Oil prices steadied on tighter supplies from major
producers, but concerns that the rising coronavirus cases could
curb demand checked gains.
Brent crude LCOc1 rose 0.2% to $42.25 a barrel. U.S. crude
CLc1 fell slightly to $39.65 a barrel.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
COVID-19 in the United States https://tmsnrt.rs/2YOWs84
World stock market valuations https://tmsnrt.rs/315xg06
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>