* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* U.S. stock futures lower
* European shares fall
* U.S. two-year, 10-year Treasuries hit record lows
* Dollar dips against yen, Swiss franc
By Ritvik Carvalho
LONDON, March 6 (Reuters) - Global stock markets tumbled and
government bonds rallied on Friday as disruptions to business
from the spreading coronavirus epidemic worsened, stoking fears
of a prolonged economic slowdown.
European shares opened sharply lower, with travel stocks
bearing the brunt. The pan-European STOXX 600 index was down
3.5% by midday in London, reaching its lowest level in more than
six months .EU
Germany's DAX .GDAXI slid 3.5%, Britain's FTSE 100 .FTSE
fell 3.2% and France's CAC 40 .FCHI fell 3.7%. The MSCI
All-Country World Index .MIWD00000PUS , which tracks shares
across 49 countries, was down 0.84%.
After their worst weekly performance since the 2008
financial crisis, global stocks measured by the MSCI index are
up 1.7% this week, as policymakers provided stimulus to combat
the economic effects of the virus.
Yields on U.S. Treasuries fell to record lows and Treasury
futures jumped as investors increased bets the Federal Reserve
will follow this week's surprise rate cut with further easing.
The yield on benchmark 10-year Treasury notes US10YT=RR
fell to a record low of 0.6950% on Friday. The two-year
equivalent fell to 0.4510%. US2YT=RR
The Fed made an emergency interest rate cut of 50 basis
points earlier this week. The Bank of Canada and the Reserve
Bank of Australia also cut rates, with investors expecting other
major central banks to follow suit soon.
Officials and companies in Britain, France, Italy and the
United States are struggling to deal with a steady rise in virus
cases that have in some cases triggered corporate defaults,
office evacuations, and panic buying of daily necessities.
"The interplay of virus containment fears and stimulus
measures means that in the near term we expect market volatility
to persist," said Mark Haefele, chief investment officer at UBS
Global Wealth Management.
Money markets are pricing in another 25 basis-point-cut from
the current 1% to 1.25% range at the next Fed meeting on March
18-19 and a 50-basis-point cut by April. Minneapolis Federal
Reserve President Neel Kashkari said late on Thursday the Fed
could cut rates further if needed. Germany's benchmark 10-year Bund yield fell to a six-month
low, within striking distance of last year's record lows.
GVD/EUR
The flu-like virus emerged late last year in central China
and has since spread to more than 80 countries. More than 3,000
people have died. Travel restrictions and factory closings aimed
at curbing the spread of the virus are expected to pressure
global growth.
Many investors were awaiting the release of U.S. non-farm
payrolls later on Friday. Recent U.S. economic data have been
encouraging, but concerns about coronavirus are likely to
overshadow any signs of a strong labour market.
Earlier in Asia, MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS fell 2.05%. Japan's Nikkei
stock index .N225 sank 2.94%. Australian shares .AXJO were
down 2.44%.
Shares in China CSI300. fell 1.22%. Stocks in Hong Kong
.HIS , another city hard hit by the virus, fell 2.12%.
In currencies, rapidly falling yields hammered the dollar
The index that measures the dollar's strength against a basket
of other currencies, was down 0.7%. USD= FRX/
Against the Japanese yen JPY= , the dollar fell to a
six-month low and was last at 105.29 yen. It sank to a two-year
trough of 0.9347 Swiss franc CHF=EBS .
"The driver is the equity markets and the collapse in U.S.
bond yields this week," said Kenneth Broux, FX strategist at
Societe Generale.
"It's been a knee-jerk reaction. What we have now is a
reversal simply on the declining U.S. equities and the
compressing differential. FRX/
The euro EUR=EBS gained 0.8% to trade at $1.1328. Markets
in the euro zone are pricing in a 93% chance that the European
Central Bank will cut its deposit rate, now minus 0.50%, by 10
basis points next week.
Oil prices slid more than 4% to their lowest since July 2017
after Reuters reported that Russia would not agree to steeper
cuts in oil output to support prices.
By 1153 GMT, Brent crude LCOc1 was down $2.06, or 4.1%, to
$47.93 a barrel. U.S. West Texas Intermediate CLc1 was down
$1.94, or 4.2%, to $43.96. O/R
Global stocks' performance vs reported coronavirus cases https://tmsnrt.rs/2vMiwG7
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