* Dollar slides vs yen, gains on commodity currencies
* Europe down 8%, Wall Street futures hit down limit
* ASX 200 plunges almost 10%, Nikkei drops 2%
* Oil down 9.5%
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
(Updates market moves throughout)
By Marc Jones and Lawrence White
LONDON, March 16 (Reuters) - Stock markets and oil prices
continued to nose-dive on Monday after the second emergency cut
in U.S. interest rates in as many weeks -- effectively to zero
-- and supportive measures from all corners failed to quell
coronavirus fears.
Central banks across Asia and Europe also cut borrowing
costs and pumped funds into the system in a bid to cushion the
economic impact as the breakneck spread of the virus all but
shut down more countries. But they had limited success in
calming panicky investors.
The volatility gauge for euro zone stocks .V2TX , known as
Europe's "fear index" surged to record highs as the main
European stock markets plunged nearly 8% in brutal opening trade
.EU , with Wall Street bracing for similar moves later.
Fear still reigned. Europe introduced curbs on
short-selling, while bond markets tried to juggle both the risk
to vulnerable countries but also that a fiscal spending splurge
might impact safe-haven debt. EUR/GVD
Oil, already reeling from a price war, plunged more than 9%
to almost $30 a barrel as investors fretted about the impact of
coronavirus on global demand.
"The central banks threw the kitchen sink at it yesterday
evening yet here we are (with deep falls in stock markets),"
said Societe Generale strategist Kit Juckes.
"There is a great sense that central banks are going to get
to grips with the issues of getting money flowing ... But the
human problem, the macro problem, there is nothing they can do
about that."
With global travel grinding to a standstill, Europe's travel
and leisure stocks index has halved in value in roughly three
weeks. .SXTP The drastic shock to demand delivered to airlines
and travel companies maybe replicated elsewhere.
The Fed's emergency 100 basis point rate cut on Sunday was
followed on Monday by further policy easing from the Bank of
Japan in the form of a pledge to ramp up purchases of
exchange-traded funds and other risky assets.
New Zealand's central bank shocked by cutting rates 75 basis
points to 0.25%, while the Reserve Bank of Australia (RBA)
pumped more money into its financial system. South Korea and
Kuwait both cut rates while Russia and Germany were throwing
together multi-billion dollar anti-crisis funds.
Japanese Prime Minister Shinzo Abe said G7 leaders would
hold a teleconference at 1400 GMT to discuss the crisis.
MSCI's index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS tumbled 5.2% to lows not seen since early 2017,
while the Nikkei .N225 fell 2.5% as the BoJ's easing steps
failed to reassure markets.
Chinese data underscored just how much economic damage the
disease has already done to the world's second-largest economy,
with official numbers showing the worst drops in activity on
record. Industrial output plunged 13.5% and retail sales 20.5%.
In Asia, Shanghai blue chips .CSI300 fell 4.3% overnight
even as China's central bank surprised with a fresh round of
liquidity injections into the financial system. Hong Kong's Hang
Seng index .HSI tumbled 4%.
Australia's S&P/ASX 200 .AXJO plunged, finishing down 9.7%
-- its steepest fall since the 1987 crash. "By any historical standard, the scale and scope of these
actions was extraordinary," said Nathan Sheets, chief economist
at PGIM Fixed Income, who helps manage $1.3 trillion in assets.
"This is dramatic action and truly does represent a bazooka.
"Even so, markets were expecting extraordinary action, so it
remains to be seen whether the announcement will meaningfully
shift market sentiment."
Sheets emphasised investors wanted to see a lot more U.S.
fiscal stimulus and evidence the Trump administration was
responding vigorously and effectively to the public health
challenges posed by the crisis.
UNDER STRAIN
Wall Street was set for further falls after New York and Los
Angeles both ordered bars, restaurants, theatres and cinemas to
shut to combat the spread of the coronavirus, mirroring similar
measures in Asia and Europe.
Markets have been severely strained as bankers, companies
and individual investors stampede into cash and safe-haven
assets while selling profitable positions to raise money to
cover losses in savaged equities. To ease the dislocation, the Fed cut interest rates by a
full percentage point on Sunday to a target range of 0% to
0.25%, its second cut this month, and promised to expand its
balance sheet by at least $700 billion in coming weeks.
Five of its peers also joined up to offer cheap U.S. dollar
funding for financial institutions facing stress in credit
markets. U.S. President Donald Trump, who has been haranguing the Fed
to ease policy, called the move "terrific" and "very good news".
The Fed's rate cut combined with the promise of more
bond-buying pushed U.S. 10-year Treasury yields down sharply as
low as 0.63% US10YT=RR from 0.95% late on Friday, though they
were back up to 0.74% ahead of U.S. trading.
In Europe, Spanish and Portuguese 10-year bond yields rose
to 9-1/2 month highs at 0.74% and 0.93% respectively, up as much
as 13 basis points on the day ES10YT=RR PT10YT=RR .
French 10-year yields also soared as much as 14 basis points
to 3-1/2 month highs at 0.14% FR10YT=RR , while Italian 10-year
yields were up 17 basis points at 1.98% IT10YT=RR having
briefly touched 2%. GVD/EUR
"The momentum we've seen in the periphery is largely to do
with the sentiment towards debt metrics in countries which after
many, many years of quantitative easing and existing central
bank support within the euro zone, are going into another fairly
significant if not larger crisis than the one before," said
Rabobank strategist Matt Cairns.
The fall in U.S. Treasury yields pounded the dollar. It was
last down 1.9% on the Japanese yen at 106.01 JPY= , marking its
second-biggest fall since May 2017. The euro went up as far as
1% to $1.1212 EUR= . /FRX
The commodity-exposed Australian dollar fell as much as 0.3%
to $0.6166 AUD=D3 while the New Zealand dollar NZD=D3
slipped 0.2% to $0.6044.
Oil fell again, with Brent crude LCOc1 last off $3.21, or
9.5% at $30.70 per barrel while U.S. crude slipped $2 to just
below $30 a barrel. O/R
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Coronavirus pummels markets https://tmsnrt.rs/2IPoKIb
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>