* European shares fall; Wall Street set to open lower
* Reports of new coronavirus cases offset lockdown easings
* Oil prices, energy stocks and travel stocks all decline
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, May 11 (Reuters) - Stock markets fell on Monday
after reports of a pick-up in new coronavirus cases rattled
investors, who worried that it could slow or reverse the
loosening of lockdown measures.
Shares had initially gained, led by Asia, where markets
cheered further loosening of coronavirus restrictions in the
region - New Zealand will ease some curbs from Thursday, and
Japan plans to end a state of emergency for areas where
infections have stabilised. In Europe, millions in France are set to emerge cautiously
from one of the region's strictest lockdowns, while Britain on
Sunday laid out its own gradual path out of lockdown.
But South Korea warned of a second wave of the virus as
infections rebounded to a one-month high, while new infections
accelerated in Germany, which has been easing its lockdown.
Investors have tried to stay optimistic in recent weeks,
opening up a gap between dire economic conditions on the ground
and a stock market rebounding because of huge stimulus
programmes as well as on the timing and speed of any recovery.
A spike in new cases in countries that have already begun to
relax restrictions on commerce would jolt market confidence
badly if it led governments to reintroduce some lockdown
measures.
"If we do have a second wave and lockdowns, that's almost
the worst outcome from an economic perspective," said Guy
Miller, chief market strategist at Zurich Insurance Company.
Miller said that would "postpone business investment
indefinitely" and see consumers retrench as hopes for a quick
economic recovery were dashed.
He said the next two or three weeks would be "pivotal" in
demonstrating how businesses and consumers were responding to
the loosening of lockdown measures.
By 1155 GMT, the Euro STOXX 600 .STOXX was down 0.87%.
Germany's .GDAXI DAX was 0.78% lower and Britain's FTSE 100
.FTSE 0.36% in the red. Energy and travel stocks were among
the hardest hit.
Wall Street looked set for a lower open after Friday's
rally, with e-Mini futures for the S&P 500 ESc1 falling nearly
1%.
World shares, measured by the MSCI world equity index
.MIWD00000PUS , which tracks shares in 49 countries, reversed
earlier gains and were down 0.15%. The index has risen nearly
30% from its March lows but remains down 13.4% in 2020.
As investors look to the reopening of economies, most have
ignored dismal economic data. The most recent was Friday's U.S.
jobs report, which showed the biggest jump in unemployment since
the Great Depression.
But the numbers were not as bad as economists had expected,
and analysts say that markets have already priced in the huge
hit to growth and employment. Record monetary and fiscal
stimulus has fired up the rebound in asset prices.
"Risk bears are being sent into hibernation," said Kit
Juckes, a markets strategist at Societe Generale. "Markets focus
on reopening economies and policy activism, bears struggle to
understand how they can ignore reinfection and economic
destruction."
Bond markets seem to think any economic recovery will be
slow -- two-year U.S. government bond yields US2YT=RR have hit
record lows at 0.105% and Fed fund futures 0#FF: last week
turned negative for the first time ever. US/
The rally in U.S. bond prices has come even as the U.S.
Treasury plans to borrow trillions of dollars in the next few
months to plug a gaping budget deficit.
The dollar, which has not been hit very hard by the decline
in Treasury yields because interest rates are near zero in most
developed countries, rallied on Monday.
It was up 0.3% against a basket of currencies =USD and
firmed 0.6% against the Japanese yen to 107.23 JPY=EBS .
The euro dropped 0.2% to $1.0827 EUR= while sterling lost
0.9% to fall below $1.23 GBP=D3 .
In commodity markets, oil prices fell as a glut weighed on
prices and the pandemic eroded global demand. O/R
Brent crude LCOc1 fell $1.11, or 3.6%, to $29.86 a barrel.
U.S. West Texas Intermediate crude CLc1 fell 92 cents, or
3.7%, to $23.82. The spot gold price climbed back to $1,700 an ounce XAU= .
Buoyed by its safe-haven appeal, gold has rallied more than 12%
so far in 2020, hitting seven-and-a-half year highs.
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Emerging markets http://tmsnrt.rs/2ihRugV
The MSCI world equity index IMAGE https://tmsnrt.rs/3dCbIee
Futures show negative Fed policy rates by Dec 2020 IMAGE https://tmsnrt.rs/3b8qXdu
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(Editing by Larry King and Kevin Liffey)