* European, U.S. stocks recover on govt spending hopes
* MSCI's world equity index down 16% so far this week
* Italian govt debt hit again as death toll passes 1,000
* European shares steady on stimulus hopes
* World FX rates year-to-date http://tmsnrt.rs/2egbfVh
(Updates prices, comments)
By Rodrigo Campos
NEW YORK, March 13 (Reuters) - Stocks across the globe
bounced back on Friday but hopes of more central bank stimulus
and government spending went only so far and indexes were set to
post large weekly drops after days of pandemic-related
panic-selling across markets.
Volatility is seen remaining high, with sharp moves expected
in both directions and across asset classes. The S&P 500 rose as
much as 6.1% intraday on Friday and was last up 3.2%.
Stocks reacted to reports that U.S. President Donald Trump
will declare a national emergency over the fast-spreading
coronavirus, opening the door to more federal aid. Two weeks ago
he had called the now-pandemic a "hoax" meant to damage his
presidency.
Wall Street led stocks higher to close the week, on bets
that coordinated monetary and fiscal stimulus in response to the
coronavirus pandemic could help soften the expected blow to the
global economy.
"There is a lot going on in the market right now and we need
the backing of the government more than we already have," said
Gene Goldman, chief investment officer at Cetera Investment
Management in California.
The Dow Jones Industrial Average .DJI rose 745.37 points,
or 3.52%, to 21,945.99, the S&P 500 .SPX gained 80.05 points,
or 3.23%, to 2,560.69 and the Nasdaq Composite .IXIC added
210.99 points, or 2.93%, to 7,412.79.
On Thursday, the Dow dropped 10%. The indexes were still
more than 25% below their record highs hit mid-February.
The pan-European STOXX 600 index .STOXX rose 1.43% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
1.72% after falling by the largest percentage on record on
Thursday.
Earlier, Japan's Nikkei .N225 fell 10% before paring
losses to close 6% lower. Australia's S&P/ASX200 .AXJO had its
wildest trading day on record, falling past 8% before surging in
the last minutes of trade to settle 4.4% higher at the close.
Nikkei futures NKc1 rose 3.53%.
U.S. Treasury yields rose as liquidity remained scarce even
after the New York Federal Reserve's action to make a massive
amount of cash available.
Benchmark 10-year notes US10YT=RR last fell 25/32 in price
to yield 0.9313%, from 0.852% late on Thursday.
Justin Hoogendoorn, head of fixed income strategy and
analytics at Piper Sandler in Chicago, said there were "very
little bids" in the market.
"It really does scream volatility, scream that there's a
lack of liquidity in the marketplace," he said.
Italy, where the COVID-19 death toll shot past 1,000 people,
saw its borrowing costs spike by about 73 basis points this week
- the most for any week since 1994. Bond yields rose across the euro zone as investors'
expectations grew for fiscal stimulus in the region to combat
the coronavirus pandemic. GVD/EUR
Oil prices were set for their biggest weekly slide since the
2008 financial crisis despite Friday's gains, as the coronavirus
outbreak threatened demand and crude producers promised more
supply.
U.S. crude CLc1 rose 1.52% to $31.98 per barrel and Brent
LCOc1 was last at $34.18, up 2.89% on the day.
The dollar extender its previous session's Dollar buying
overnight, but the yen felt the pressure of risk-on trading.
Market participants said signs of dollar funding stress
persist and policymakers probably need to do even more.
"Underlying concerns regarding the economic fallout from the
coronavirus on credit markets broadly remain," said Shaun
Osborne, chief FX strategist at Scotiabank in Toronto.
"It may be tempting to look for signs of a low in global
stocks but with the underlying issue - the coronavirus - still
unchecked, we think that is premature at this point," he added.
The dollar index =USD rose 1.217%, with the euro EUR=
down 0.9% to $1.1082.
The Japanese yen weakened 3.05% versus the greenback at
107.94 per dollar, while sterling GBP= was last trading at
$1.2296, down 2.19% on the day.
World stocks set for largest weekly drop since Oct 2008 https://tmsnrt.rs/2wPc5lV
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