Stocks Suffer, Treasure Gives New Depths As Virus Spreads | New

By Stanley White

TOKYO (Reuters) – Asian stocks and US equity futures fell Friday following another Wall Street rout as coronavirus disruption beyond China worsened, fueling fears of a prolonged global economic slowdown.

Largest MSCI Asia Pacific Equity Index Excluding Japan <.MIAPJ0000PUS> is down 1.3%. Australian stocks <.AXJO> down 1.64%, while the Japanese Nikkei stock index <.N225> slipped 2.29%.

Yields on 10-year US Treasuries fell to an all-time low and two-year yields fell to their lowest level in more than three years, as investors increased bets that the Federal Reserve will follow the surprise drop in 50 basis points of the week with further easing to prevent companies bond spreads from widening further.

Falling yields hammered the dollar, which traded near a six-month low against the yen and near a two-year low against the Swiss franc.

Oil prices have plummeted due to fears that non-OPEC oil producers will not agree to cut production even if global demand for energy weakens.

The spread of a new coronavirus has accelerated so much in Europe, Britain and North America that investors who once minimized the virus are now reassessing the risks, which means more volatility on the financial markets.

"The optimism abroad is fading and now people are really starting to wonder how bad things are," said Takuya Kanda, director general of research at Gaitame.com Tokyo Research Institute.

"For some investors, treasury bills are the only place to park their money, but for others, buying the dollar or stocks is out of the question."

American Equity Futures On Friday, early gains were wiped out to fall 0.12% in Asia.

The S&P 500 <.SPX> fell 3.39% on Thursday. The S&P 500 Benchmark Index ended more than 10% down from its closing high on February 19, after last week recording its largest weekly percentage decline since October 2008.

Authorities and businesses in Britain, France, Italy and the United States are struggling to cope with a steady increase in coronavirus infections which in some cases have triggered business failures, evacuations office and panic shopping for daily necessities.

The flu-like virus appeared at the end of last year in the central city of Wuhan, China, and has since spread to more than 80 countries and killed more than 3,000 people. New infections have slowed in China, but some countries are not ready to worry.

Actions in China down 0.96%, while Hong Kong stocks <.HIS>, another city hard hit by the virus, lost 1.89%.

Travel restrictions and factory closures aimed at curbing the spread of the virus are expected to put downward pressure on global economic growth.

Many investors expect the release of US non-farm payrolls later Friday. Recent economic data in the United States is encouraging, but concerns about the epidemic should overshadow any signs of a solid job market.

The Federal Reserve and the Bank of Canada have both responded to economic threats by cutting interest rates by 50 basis points this week.

The yield on 10-year reference Treasury bills fell to a record low of 0.8980% in Asia on Friday. The yield at two years fell to 0.5420%, the lowest since July 2016.= rr>= rr>

Minneapolis Federal Reserve Chairman Neel Kashkari said Thursday night that the Fed could cut rates further if the impact of the coronavirus is worse than expected.

Money markets forecast a further 25 basis point decline from the current range of 1% to 1.25% at the next Fed meeting on March 18-19, and a decline of 50 basis points in April.

Against the Japanese yen , the dollar fell to a six-month low and was 106.03 yen. The greenback also sank to a two-year low of 0.9447 Swiss franc .= ebs>=>

Sterling traded near a week-long high against the dollar.= d3>

The euro stable at $ 1.1225. Eurozone markets expect the European Central Bank to cut its deposit rate, which is now 0.50%, by 10 basis points next week, to be 93% likely.= ebs>

Crude american fell 0.37% to $ 45.73 a barrel. Brent crude fell 0.32% to $ 49.83 a barrel. Concerns about a drop in global demand caused by the coronavirus epidemic and uncertainty about production cuts have weighed on crude prices.

(Reporting by Stanley White; Editing by Sam Holmes)