(Corrects to restore dropped word in paragraph 2)
* Asian shares hit lowest level since early 2019
* U.S. stock futures down more than 2%
* Markets expect ECB to cut rates despite side-effects
worries
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano
TOKYO, March 12 (Reuters) - Global shares crumbled on
Thursday after U.S. President Donald Trump said the United
States will suspend all travel from Europe as he unveiled
measures to contain the coronavirus epidemic that has extracted
a heavy human and economic toll worldwide.
U.S. S&P500 futures ESc1 dropped more than 3%, a day after
the S&P 500 .SPX lost 4.89%, putting the index in bear market
territory, defined as a 20% fall from a recent top.
Euro Stoxx 50 futures STXEc1 dived more than 5% to their
lowest levels since mid-2016. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 2% to
its lowest level since early 2019, while Japan's Nikkei .N225
lost 3.3%.
Australia's benchmark .AXJO dived 3.7% and South Korea's
Kospi .KS11 fell 2.7% to a four-year low.
Trump announced on Wednesday the United States will suspend
all travel from Europe, except from the United Kingdom, to the
United States for 30 days starting on Friday. He also announced some other steps, including instructing
the Treasury Department to defer tax payments for entities hit
by the virus.
But investors were hardly convinced those measures will turn
around the global economy as concerns grew that the number of
infections could quickly snowball in many countries.
"In many European countries, the number of patients are
increasing in a track similar to Italy. The U.S. appears to be
following that path. It now looks realistic to expect, within 10
days, those countries could have more than ten thousands
patients."
Safe-haven assets were back in favour, though many of them
were still below recent peaks, which some market players suspect
reflects a desperate bout of profit-taking to make up for losses
suffered elsewhere.
Gold XAU= edged up 0.5% to $1,642.5 per ounce but still
stood well below Monday's high above $1,700.
The 10-year U.S. Treasuries yield fell 8.7 basis points to
0.737% US10YT=RR , though it is still more than 40 basis points
above a record low of 0.318% touched on Monday. Some analysts
say the rise could reflect worries about an increase in
government spending for stimulus.
The two-year yield US2YT=RR fell 4 basis points to 0.458%,
but stood well above Monday's low of 0.251%.
Fed fund rate futures 0#FF: , however, are still pricing in
a rate cut of at least 0.75 percentage points and about a 50%
chance of a 1.0 percentage point cut at a policy review on March
17-18.
"The initial reaction in financial markets shows that even
after Trump spoke investors feel they need to avoid risk," said
Junichi Ishikawa, senior currency strategist at IG Securities in
Tokyo.
"Trump has outlined what he considered to be tough measures,
but movements in stocks, stock futures, and currencies show that
this is not enough to ease investors' concerns. We are in a very
difficult situation now."
Oil prices extended losses as they were also hit by renewed
weakness in the stock market and as Saudi Arabia and the United
Arab Emirates announced plans to escalate the burgeoning price
U.S. West Texas Intermediate (WTI) crude CLc1 last traded
up slightly at $32.14 per barrel, down 2.5%.
In the currency market, the dollar slid against the
safe-haven yen and the Swiss franc.
The U.S. currency fell 0.7% to 103.64 yen and lost 0.5% to
0.9333 franc CHF= .
The euro traded at $1.1272 EUR= , flirting with its lowest
level in a week, ahead of the European Central Bank's policy
meeting later in the day.
The ECB is all but certain to unveil new stimulus measures,
including new, ultra-cheap loans for banks to pass onto small
and medium-sized firms. Markets have priced in a 10 basis point cut to its already
record low minus 0.50% policy rate though many policymakers have
said further cuts could be counterproductive because they hurt
bank margins to the point of thwarting lending.