Explainer: Antitrust law won't get in the way of U.S. acting to raise oil prices

WASHINGTON (Reuters) – It is illegal for oil producers to meet to discuss pushing up oil prices under U.S. antitrust law, but perfectly legal if state regulators or the federal government set lower production levels for them, U.S. antitrust experts said on Friday.

That said, the decision by a Texas state official to talk with Saudi Arabia and Russia about supporting oil prices marks a sharp contrast with U.S. policy. A year ago President Donald Trump tweeted that OPEC needed to “increase the flow of oil. World Markets are fragile, price of Oil getting too high.”

A two-thirds drop in oil prices in the last three months has swiftly changed Washington’s thinking on whether or not it should meddle in the energy market.

Trump has called on top producers to stop a market rout caused by the coronavirus pandemic, as OPEC and its allies work on a deal for an unprecedented oil production cut equivalent to around 10% of global supply.

“Trump himself, other federal officials, and Congress cannot violate antitrust (law) by any official actions they take. It doesn’t apply to them,” said Chris Sagers, who teaches antitrust at the Cleveland-Marshall College of Law.  

When oil prices are high, anti-OPEC bills, nicknamed NOPEC, gained traction in Congress. The bills would allow OPEC to be sued in U.S. courts for violating antitrust laws.

Such bills have been introduced in the U.S. Senate and House of Representatives for more than a decade, but have never succeeded. In February 2019, the latest version was approved by the House Judiciary Committee.

“From an antitrust perspective, businesses have been complaining about OPEC and complaining about these foreign systems for years,” said Barbara Sicalides, an antitrust expert at Pepper Hamilton LLP. “I don’t think it’s an antitrust violation. It’s certainly a change in policy.”

Oil prices have fallen to around $20 per barrel from nearly $65 at the start of the year as more than 3 billion people went into a lockdown, reducing global oil demand by as much as a third.

Texas regulator Ryan Sitton, one of three members of the Texas Railroad Commission, waded into oil diplomacy on Thursday, calling Russia’s energy minister to discuss possible oil production curbs and angling for talks with Saudi Arabia as many producers in the U.S. state’s biggest industry warned it was near collapse.

The Oklahoma Energy Producers Alliance has urged its state’s regulator to curtail crude oil production.

This kind of conduct in private industry would not be permitted, but under the state action doctrine it is allowed if it is done under the commission’s authority, said Sicalides.

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Stocks climb on oil price surge despite grim U.S. jobs data

NEW YORK (Reuters) – World equity markets climbed on Thursday on a surge in risky assets like oil, offsetting concerns over an increasing death toll from the coronavirus pandemic that is expected to push the global economy into recession.

Investors sought the safety of the U.S. dollar and government bonds. Stocks and oil futures were among the few risk assets that advanced, with oil benchmarks surging 20% after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their oil price war.

MSCI’s gauge of stocks across the globe rose 1.20% after broad declines in Japan. European shares also rose 0.42% despite data showing U.S. weekly jobless claims jumped to a record 6.6 million, double the record from the previous week.

At the close of trading on Wall Street, the Dow Jones Industrial Average rose 469.93 points, or 2.24%, to 21,413.44, the S&P 500 gained 56.4 points, or 2.28%, to 2,526.9 and the Nasdaq Composite added 126.73 points, or 1.72%, to 7,487.31.

“Most of the selling was done yesterday in anticipation of the jobs number and investors were looking for entry points as everyone expected it to be bad and they have been,” said Jamie Cox, managing partner of Harris Financial Group in New York.

“A lot the trading has been on fixed income because if oil prices stabilize, that will stabilize the bond market and will feed through to reduced default risk.”

Investors sought the perceived safety of government bonds. Benchmark U.S. 10-year notes last rose 3/32 in price to yield 0.6251%, from 0.635% after trading hours on Wednesday.

The World Health Organization said the global case count would reach 1 million and the death toll 50,000 in the next few days. It currently stands at 46,906.

U.S. President Donald Trump, who had initially played down the outbreak, told reporters at the White House on Wednesday that he is considering a plan to halt flights to coronavirus hot zones in the United States.

In currency markets, the dollar rose 0.632% against a basket of six major currencies after a gain of 0.53% overnight. The euro traded down 0.99% at $1.0853 as the dollar advanced.

Brent crude futures jumped 20.9% to $29.91. U.S. West Texas Intermediate (WTI) crude futures soared 21% to $24.73.

Trump said he had talked with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal within a “few days” to lower production, thereby bring prices back up.

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Oil crash poses severe test for OPEC+ after Moscow, Riyadh miscalculate

DUBAI/LONDON (Reuters) – U.S. President Donald Trump says he has brokered a deal with Saudi Arabia and Russia that would see sweeping oil output cuts. Riyadh has called for emergency talks, and Moscow has said it no longer plans to hike production in a battle for market share.

But the question remains: even if the world’s top three producers reach an unprecedented pact to curb oil output, can any deal remove enough oil when the coronavirus has destroyed a third of global demand for crude? [nL8N2BQ36Q]

One thing, however, has become clear: as oil prices in the past three months made some of their biggest gyrations in history, taking action will prove a severe, if not impossible, test for OPEC+, the informal grouping that had propped up crude prices for three years until their agreement collapsed in March.

An OPEC source briefed on Saudi oil policy said the scale of the fall in demand might require action beyond the scope OPEC+ could take alone. “This is an extraordinary situation that needs extraordinary measures,” the source said.

Oil demand has dropped by as much as 30 million barrels per day (bpd), roughly equivalent to the combined output of Saudi Arabia, Russia and the United States.

The fall is also more than the total production of all members of the Organization of the Petroleum Exporting Countries, the group that for decades was the most powerful player in the oil market.

“The magnitude of the current disruption is far beyond what OPEC can deal with alone,” the Saudi state King Abdullah Petroleum Studies and Research Center wrote this week.

It said “greater international cooperation was needed” and predicted U.S. and other higher cost producers could suffer.

Neither Saudi Arabia nor Russia has directly asked the United States – which has become the world’s biggest oil producer on the back of the shale revolution helped by OPEC+ support for prices – to join the any output cuts, a move prohibited by U.S. antitrust law.

But, in reality, some degree of U.S. participation would be essential for any deal that hoped to make a difference to market fundamentals.

MISCALCULATIONS

“If the number of OPEC+ members increase and other countries join, there is a possibility of a joint agreement to balance oil markets,” one of Russia’s top oil negotiators, Kirill Dmitriev, who heads the nation’s wealth fund, told Reuters.

Still, how to respond revives the acrimonious debate in early March in Vienna, where Moscow and Riyadh fell out and the OPEC+ deal on supply curbs came to an abrupt end.

Saudi Arabia had pushed for deep additional cuts, saying it was no longer ready to shoulder the biggest burden of reductions and wanted others – with a finger pointed firmly at Russia – to take a more equitable share.

Moscow’s response was that deeper cuts made no sense until the full extent of the fallout from the coronavirus was known, given measures to combat the virus were bringing the world to a standstill, sending demand for jet fuel, gasoline and diesel into a nosedive.

Instead of finding a way to overcome their differences. Both sides misread the determination of the other to stick to their guns. Even as the finances of both nations took a pounding, they left the meeting promising to open the taps and grab market share with the inevitable result that oil prices crashed.

“Russia had miscalculated the Saudi response,” a veteran Russian oil insider said. “Moscow had never thought the Saudis would threaten to raise production so steeply. We thought they would just carry on with existing cuts.”

Saudi Arabia for its part also misjudged the magnitude of the oil demand collapse that sent oil prices to their lowest in almost two decades.

Riyadh quickly found that, in a market awash with crude, even usually reliable buyers don’t want more and steep discounts do little to change this. Oil majors and big importing nations alike have spurned the extra cargoes. [nL8N2BJ6O8]

CLAIMING VICTORY

Now both sides may now have a chance to reconsider – and possibly a way to claim they were both right. If a deal is reached, Riyadh can say pumping more crude forced Russia back to the table. If others join in, Moscow can say the virus has had a bigger impact than anything OPEC+ alone could have dealt with.

Trump, who has said Moscow and Riyadh “went crazy” by pumping more after their supply deal fell apart, stunned the market on Thursday by saying he had brokered a deal with Saudi Arabia and Russia.

“I expect and hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be great for the oil & gas industry!” Trump wrote on Twitter, citing a figure for cuts that would be equivalent to 10% of global supply.

Trump was due to meet U.S. company executives on Thursday, but a senior administration official said U.S. domestic producers would not be asked to chip in with their own cuts.

However, even if U.S. producers don’t voluntarily take part, they may be forced to. With oil at such low prices, they may have to shut down a lot of higher cost oil production — or they will have ask for state funds to keep them afloat.

Any formal agreement to cooperate with OPEC would be complex because of the antitrust laws. But some U.S. shale producers in Texas have requested the energy regulator mandate cuts for the first time in 50 years – and one of the three commissioners at the U.S. energy regulator has said it might make sense to do so.

The commissioner, Ryan Sitton, held a call with OPEC Secretary General Mohammad Barkindo last month.

“There is so much oil and in some cases it’s probably less valuable than water … We’ve never seen anything like it,” Trump said after speaking to Putin.

U.S. officials have discussed a number of ideas about how the country can help manage global oil markets. [nL1N2BK2VY]

But in a nod to Moscow, Washington offered this week to begin lifting Venezuela sanctions if the opposition and members of the government agreed to form an interim government, shifting on a policy Moscow has called unfair. [nL1N2BO0FP]

The OPEC source said it was not clear what Washington could propose to Riyadh to alleviate the crisis.

It is also far from clear if the producers can act fast enough to make a swift difference in these turbulent times.

“You can see every now and then when Trump says he will talk to Putin about energy, the market picks up a bit,” said Saad Rahim, chief economist at trader Trafigura. “But … it’s too late.”

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Asian shares hold on to gains but virus keeps markets on edge

TOKYO/NEW YORK (Reuters) – Asian stocks clung to gains on Wednesday, helped by a bounce in Australian shares, but risks for equities remain large as the coronavirus pandemic rattles the underpinnings of the global economy.

E-Mini futures for the S&P 500 traded 1.39% lower in Asian trade, highlighting the cautious mood.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.23%. Australian shares jumped by 2.87%, reversing a 2% decline on Tuesday, as a slowdown in new coronavirus cases and rising iron ore prices lifted the market.

Shares in China, where the coronavirus first emerged late last year, rose 0.18%, supported by hopes the world’s second-largest economy has started to recover.

China’s factory activity improved in March after plunging a month earlier, a private survey showed on Wednesday, just scraping into positive territory and beating analysts’ expectations.

Shares in South Korea, also hit hard by the virus, rose 0.19%, but Japanese shares fell 1.05% as a rapid increase in coronavirus infections in Tokyo fueled speculation the government will place the capital on lockdown.

Wall Street tumbled on Tuesday, with the Dow registering its biggest quarterly fall since 1987 and the S&P 500 its steepest quarterly drop since a decade ago on growing evidence of the massive downturn the pandemic will incur.

U.S. economic activity is likely to be “very bad” and the unemployment rate could rise above 10% because of efforts to slow the spread of the coronavirus, Cleveland Federal Reserve Bank President Loretta Mester told CNBC.

“Investors still want to buy equities, but the coronavirus is making everyone more cautious,” said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co in Tokyo.

“There are still a lot of risks out there, but if you can identify individual shares with good dividend yields and strong financials, then you can buy at a pretty good price.”

MSCI’s gauge of stocks across the globe was little changed. The index fell nearly 22% for the quarter.

The number of coronavirus infections globally headed toward 800,000. Deutsche Bank analysts noted, however, that for two consecutive days the global growth in new cases was below 10%, having exceeded that rate for most of the past two weeks.

Health officials were much more cautious. A World Health Organization official warned that even in the Asia-Pacific region, the epidemic was “far from over.”

The dollar bounced in Asia, rising 0.28% to 107.86 yen and gaining 0.36% to $1.2375 per British pound as investors adjusted positions before the release of U.S. manufacturing data.

The dollar fell broadly on Tuesday after the U.S. Federal Reserve said it will allow foreign central banks to exchange their holdings of U.S. Treasury securities for overnight dollar loans to ease a dollar funding crunch.

The yield on the benchmark 10-year U.S. Treasury note eased slightly to 0.6554%.

U.S. crude held steady at $20.49 a barrel, but Brent crude fell 2.09% to $25.80 per barrel as the United States, Russia, and Saudi Arabia jostle over a massive oversupply of oil.

Crude oil benchmarks ended a volatile quarter with their biggest losses in history, with both U.S. and Brent futures hammered throughout March due to the pandemic and the eruption of a Saudi-Russia price war.

Global fuel demand has been cut sharply by travel restrictions due to the coronavirus. Forecasters at major merchants and banks see demand slumping by 20% to 30% in April, and for weak consumption to linger for months.

(Graphic: MSCI All Country Wolrd Index Market Cap link: here)

(Graphic: Global currencies vs. dollar link: here)

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World stocks rally after Chinese data boost to close worst quarter since 2008

LONDON (Reuters) – World stocks looked set to close their worst quarter since 2008 on a brighter note on Tuesday, as strong Chinese factory data held out hope for an economic revival even as much of the rest of the world shut down to fight the coronavirus.

Stocks have rallied since the start of last week but remain down more than 20% for the quarter. European shares have had an even worst time, suffering their worst three months since 1987.

But with trillions wiped off global markets in March and policymakers responding with more than $10 trillion and counting of fiscal and monetary stimulus packages, a semblance of calm has returned this week.

Some analysts have been bold enough to call a bottom in stocks and say the lows of early last week are unlikely to be revisited.

European stocks rallied at the open. The Euro STOXX .STOXXE gained 1.7%, France’s CAC 40 .FCHI 1.15% and the German DAX GDAX 2.08%. Britain’s FTSE 100 .FTSE rose 1.8%.

That followed gains in Asia after China’s official manufacturing purchasing managers’ index (PMI) rose to 52.0 in March from a record-low 35.7 in February, topping forecasts of 45.0.

Analysts cautioned that underlying activity probably remained below par, since the improvement measured the net balance of companies reporting an expansion or contraction, but markets cheered the news.

S&P 500 futures rose 0.6% ESc1, pointing to a stronger open on Wall Street after a rally on Monday lifted the U.S. index towards a 20% gain since the lows of last week.

Despite the more positive mood, not everyone is convinced the current rally has legs.

“In spite of the significant sell-off of most growth-oriented assets since mid-February, we are concerned there is further downside ahead,” said Salman Baig, an investment manager at Unigestion.

“The violent market action should not be understated, but the underlying cause – an accelerating pandemic requiring large parts of the economy to shut down – is still with us.”

The pace of coronavirus infections globally was heading towards 800,000. But Deutsche Bank analysts noted that for two consecutive days the global growth in new cases was 10%, after being well above that for most of the past two weeks.

Health officials are much more cautious. A World Health Organization official warned on Tuesday that even in the Asia-Pacific region the epidemic was “far from over”.

“This is probably the most embarrassing statistic for the West that China could possibly release. Not only did China stop the virus with just 3,309 deaths, they also appear to have done it with just a one-month shutdown of the economy,” Charlie Robertson, the chief economist at Renaissance Capital, said on Twitter.

Some analysts dispute China’s figures, however.

OIL BOUNCES

Elsewhere, oil prices rose off the 18-year lows hit on Monday after the United States and Russia agreed to talks to stabilize energy markets.

Oil prices have been hit by a double whammy, with U.S. crude at one point falling below $20 a barrel on Monday, as the virus outbreak cut demand worldwide and Saudi Arabia got into a price war with Russia.

Brent crude LCOc1 was up 43 cents, or 1.9%, at $23.19 a barrel, after closing on Monday at $22.76, its lowest finish since November 2002. nL4N2BO131

U.S. crude Clc1 was up $1.21, or 6.0%, at $21.30 a barrel, after settling in the earlier session at $20.09, its lowest since February 2002.

The dollar rose for a second day, although the gains were more controlled than the jumps of earlier this month that put severe stress on funding markets for the U.S. currency.

The dollar, measured against a basket of currencies, was up 0.3% at 99.493 =USD.

The euro dropped 0.4% to $1.0995 EUR=EBS. Sterling slipped 0.7% to $1.2330 GBP=D3. The yen was 0.5% lower against the dollar JPY=EBS.

Analysts say investors rebalancing their portfolios at month-end and quarter-end were probably behind some of the dollar’s moves over the next 24 hours.

There was little respite for emerging-market currencies, however. The South African rand ZAR= was near record lows and Latin American currencies were falling once again.  

Bond market moves were more measured than in recent weeks. Italian government bond yields IT10YT=RR were steady before an auction of debt, amid hopes the country’s efforts to contain the spread of the coronavirus may be starting to work.

German benchmark 10-year yields rose 5 basis points to -0.474% DE10YT=RR. U.S. Treasury yields gained 2 to 4 bps, as investors sold safer bonds and bought into equities.  

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GLOBAL MARKETS-Stocks down on virus' economic toll; dollar falls further

* USD on track for largest weekly loss since 2009

* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh (Updates to market close, adds stimulus signed into law)

By Rodrigo Campos and Koh Gui Qing

NEW YORK, March 27 (Reuters) – Stocks across the globe fell on Friday after a historic three-day run-up, as skittish investors kept indices on track for their worst monthly and quarterly performances since 2008, while the dollar fell by the most in any week since 2009.

Shares on Wall Street ended near Friday’s lows and the dollar fell further after the U.S. House of Representatives, as expected, approved a $2.2 trillion stimulus package, the largest in U.S. history. After the markets closed, President Donald Trump signed the bill into law.

The dollar’s slump was seen partly as a sign that central bankers have been successful in easing stress in the money markets.

Market volatility is expected to persist as the coronavirus pandemic that triggered closures in economies worldwide remains very much a threat.

The United States surpassed two grim milestones as virus-related deaths soared past 1,200 and it became the world leader in confirmed cases. Worldwide, confirmed cases rose above 551,000 with nearly 25,000 deaths.

The stimulus “is not necessarily enough to make people say, ‘I’ve got to run out and buy stocks,’” said Rick Meckler, a partner at Cherry Lane Investments in New Jersey. “That’s going to take more time.”

Uncertainty over the overall human and economic toll was reflected in financial markets. MSCI’s gauge of global stocks rallied by the most in any week since December 2008, but is also poised for its largest month- and quarter- drops since 2008, during the height of the financial crisis.

Nervous investors supported demand for gold, whose prices jumped by the most in any week since 2008 despite a Friday decline.

The coronavirus infection rate is driving much of the market at a time of great uncertainty, said Yousef Abbasi, global market strategist at INTL FCStone Financial Inc in New York.

“My big hang-up here is when the curve does start to flatten, that doesn’t mean we can return to normal human and economic behavior,” he said.

“If we do return to normal human and economic behavior, we risk the chance the curve goes parabolic again. Just from the perspective of how long this potentially can last, there’s still a great deal of uncertainty.”

The Dow Jones Industrial Average fell 915.39 points, or 4.06%, to 21,636.78, the S&P 500 lost 88.6 points, or 3.37%, to 2,541.47 and the Nasdaq Composite dropped 295.16 points, or 3.79%, to 7,502.38.

The pan-European STOXX 600 index lost 3.26%, and MSCI’s gauge of stocks across the globe shed 2.39%. Emerging market stocks lost 1.03%.

Stock markets have rallied over the past week on trillions of dollars of economic stimulus enacted or pledged by policymakers worldwide, from central banks to governments. More may be needed as the virus slams the brakes on economic activity and increases healthcare spending.

“Next week, markets will likely continue to focus on the spread of COVID-19 – whether European cases are reaching a peak, how much of the U.S. will be put in lockdown, and whether China can avoid a second wave,” said Gaétan Peroux, strategist at UBS Global Wealth Management.

The $2.2 trillion stimulus package signed by Trump will flood the world’s largest economy with money to stem the economic damage from the pandemic.

Amid the avalanche of stimulus, the U.S. dollar extended its daily decline and posted its biggest weekly decline since early 2009. The dollar index fell 0.937% on Friday.

The euro was up 0.97% to $1.1135, the Japanese yen strengthened 1.49% versus the greenback at 108.00 per dollar, while sterling was last trading at $1.2447, up 2.02% on the day.

The U.S. currency’s fall after two weeks of steep gains suggests the Federal Reserve’s efforts to relieve a crunch in the dollar-funding market are working, some analysts said.

“What we are seeing is abating stress in the money markets. Action by central banks has been successful so far and a shortage of dollars has been taken off the table,” said Ulrich Leuchtmann, head of FX and EM research at Commerzbank.

U.S. Treasury yields posted a weekly decline, ending Friday near the day’s lows.

Benchmark 10-year notes last rose 1-9/32 in price to yield 0.6778%, from 0.808% late on Thursday. The 30-year bond last rose 3-24/32 in price to yield 1.2555%, from 1.395%.

Oil prices extended their fall on demand concerns as the virus slowed economies to a crawl, which outweighed the stimulus efforts. U.S. crude recently fell 3.98% to $21.70 per barrel and Brent was recently at $24.83, down 5.73% on the day.

Gold market participants remained concerned about a supply squeeze after a sharp divergence between prices in London and New York. The virus has grounded planes used to transport gold and closed precious metal refineries.

Spot gold dropped 1.0% to $1,613.02 an ounce. The metal posted its largest weekly advance since 2008.

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Asian markets cautiously await U.S. stimulus, jobs

SINGAPORE (Reuters) – Asian stock markets were poised for a cautious start on Thursday following two days of rallies, as investors await the passage and details of a $2 trillion stimulus package in the United States to address the economic fallout from the coronavirus.

Senators are set to vote on the plan later on Wednesday in Washington. The bill includes a $500 billion fund to help hard-hit industries and a comparable amount for direct payments of up to $3,000 each to millions of U.S. families.

It cannot come soon enough, with potentially enormous weekly U.S. initial jobless claims to appear in data due at 1230 GMT.

Markets in Australia and New Zealand began in the green, with the NZ50 up 3% and the S&P/ASX 200 up 2%.

Nikkei futures last traded 2% below the index’s cash close. Hong Kong futures were 1% higher and China A50 futures were up 0.2%.

“There has been so much stimulus thrown at this,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney.

“But the positivity related to it is really just sentiment,” she said, adding that investors were largely flying blind with so many companies withdrawing earnings guidance. Jobless figures may offer a “reality check,” she said.

In perhaps an early sign of the fragile mood, the risk-sensitive Australian dollar dropped 1% and the safe-haven Japanese yen rose in morning trade. [FRX/]

U.S. stock futures traded slightly negative, following the first back-to-back session rises on Wall Street in over a month.

The Dow Jones Industrial Average rose 2.4% and the S&P 500 1.2%, while the Nasdaq Composite dropped half a percent following a Nikkei report that Apple was weighing a delay in the launch of its 5G iPhone.

JOBLESS CLAIMS TO TEST BOUNCE

The money at stake in the stimulus bill amounts to nearly half of the $4.7 trillion the U.S. government spends annually.

But it also comes against a backdrop of bad news as the coronavirus spreads and as jobless claims are set to soar, with both set to test the nascent bounce in markets this week.

California Governor Gavin Newsom told reporters on Wednesday that a million Californians had already applied for jobless benefits this month – a number that knocked stocks from session highs and has analysts bracing for worse to come.

RBC Capital Markets economists had expected a national figure over 1 million in Thursday’s data, but say “it is now poised to be many multiples of that,” as reduced hours across the country drive deep layoffs.

“Something in the 5-10 million range for initial jobless claims is quite likely,” they wrote in a note.

That compares to a 695,000 peak in 1982. Forecasts in a Reuters poll range from a minimum of 250,000 initial claims, all the way up to 4 million.

Trepidation seemed to put a halt on the U.S. dollar’s recent softness in currency markets, with the dollar ahead 1% against the Antipodean currencies and up 0.6% against the pound.

It slipped 0.3% to 110.85 yen.

U.S. crude slipped 1.5% to $24.11 per barrel and gold steadied at $1,608.14 per ounce.

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GLOBAL MARKETS-Stocks, gold surge on new stimulus from Fed, others

(Adds gold, oil settlement prices)

* Stocks rally in biggest single-day bounce in month

* Major indexes post best gains since 2008 financial crisis

* Investors relieved as Fed pledge eases bond stress

* Factory surveys show extent of economic damage

By Herbert Lash, Sujata Rao and Marc Jones

NEW YORK/LONDON, March 24 (Reuters) – Financial markets rebounded sharply on Tuesday, with a measure of global equities headed for its biggest bounce since the crisis erupted a month ago, while the safe-haven dollar recoiled as investors welcomed unprecedented global stimulus efforts.

Investors hoped the U.S. Federal Reserve’s offer of unlimited bond-buying would help avert a global depression with the help of other rescue packages, though it was not expected by itself to mitigate the devastating impact of the coronavirus.

The Fed’s action had failed to persuade Wall Street on Monday, with losses of 2%-3% on major indexes. But the mood improved on Tuesday as other governments and central banks stepped in and Congress readied a $2 trillion stimulus package to limit the economic fallout from the fast-spreading pandemic.

U.S. gold futures climbed as much as 6.7% to $1,672.60 an ounce as the moves by the Fed and others eased the need for cash and slashed the demand for dollars.

“The Fed’s measures are unprecedented, and they have been extremely proactive in preventing this external shock from morphing into a wider funding crisis,” said Vasileios Gkionakis, head of FX strategy at Lombard Odier.

U.S. and European stocks jumped 6% or more and the dollar index, a basket of major trading currencies, slid.

MSCI’s gauge of stocks across the globe gained 7.00%, the largest single-day gain since equities tumbled from all-time highs a month ago.

The broad pan-European STOXX 600 index rose 8.40%, its strongest session since late-2008. The index is still down about 30% from a record peak hit in February.

German stocks jumped 11% and British blue chips added 9% as both bourses also posted their best sessions since the global financial crisis in 2008.

Europe’s so-called fear gauge fell to 52.53, its lowest in nearly two weeks, after spiking to 12-year highs earlier this month.

Emerging market stocks rose 6.04%.

On Wall Street, the Dow Jones Industrial Average rose 1,591.77 points, or 8.56%, to 20,183.7. The S&P 500 gained 158.39 points, or 7.08%, to 2,395.79 and the Nasdaq Composite added 429.93 points, or 6.27%, to 7,290.61.

The Fed also will expand its mandate to corporate and municipal bonds and backstop a series of other measures that analysts estimate will deliver more than $4 trillion in loans to non-financial firms.

Other countries unveiled their own measures. South Korea’s ravaged market climbed 8.6% after the government doubled a planned economic rescue package to 100 trillion won ($80 billion).

In China, mainland stocks posted their biggest gain in three weeks of almost 3%, while Japan’s Nikkei soared 7%, its biggest daily gain in four years.

Still, investors remained wary, as the number of coronavirus infections topped 350,000 and new infections brought in from abroad rose in China.

Business activity collapsed from Australia and Japan to Western Europe at a record pace in March, as measures to contain the coronavirus hammered the world economy, and Japan said it was postponing the Olympics.

IHS Markit’s flash composite Purchasing Managers’ Index (PMI) for the euro zone, seen as a good gauge of economic health, plummeted to a record low of 31.4 in March, in the biggest one-month fall since the survey began in 1998.

With no resolution to the pandemic and not enough visibility into the depth of the economic downturn, it’s too early to call the end to the market’s rout, said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

“The answer is still, ‘you got to get it under control,’” Saluzzi said about the coronavirus. “Everybody keeps saying it’s going to get worse before it gets better, so the markets are going to remain choppy and volatile.”

The government and central bank financial support helped calm nerves in bond markets, where yields on two-year U.S. Treasuries hit their lowest since 2013.

The benchmark 10-year U.S. Treasury note fell 15/32 in price to yield 0.8148%.

Germany’s 10-year yield was up 2 basis points on the day at -0.36%, compared with a 4 bps rise before the purchasing managers index (PMI) releases, all small moves when compared to record lows hit at -0.90% earlier in March.

ALL ABOUT THE ECONOMY

The impact of the virus on the global economy is evident in a series of growth forecast downgrades and advance readings of PMIs across the world’s biggest economies.

German activity plunged to the lowest since the 2009 crisis, driven by a record services contraction, while French activity hit all-time lows. Japan posted its biggest-ever services fall.

However, the prospect of massive Fed funding pushed the greenback 0.26% lower against rivals, off three-year peaks , falling against the yen and sliding 1% versus the euro.

Brent futures rose 12 cents to settle at $27.15 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 65 cents to settle at $24.01.

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