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* Oil in biggest single-day rout since Gulf War in 1991
* Crude falls more than 30% as Saudi Arabia cuts prices
* Yen soars to three-year high vs dollar with 3% jump
* Pan-Europe stocks enter bear market territory
* Dow, S&P 500, Nasdaq close in on bear territory
* Fed funds fully price 75 bps cut in March
* 30-year Treasury yields drop below 1%
* U.S. crude vs energy sector ETFs: https://tmsnrt.rs/2TPLlcD
By Herbert Lash and Karin Strohecker
NEW YORK/LONDON, March 9 (Reuters) - Global stock markets
plunged on Monday and oil prices tumbled by as much as a third
after Saudi Arabia launched a price war with Russia, sending
investors already spooked by the coronavirus outbreak fleeing
for the safety of bonds and the Japanese yen.
A benchmark pan-Europe index entered bear market territory
and a 7% slide in the S&P 500 at the open on Wall Street
triggered a circuit-breaker put in place after the financial
crisis a decade ago, halting U.S. stock trading for 15 minutes.
The yield on the 10-year U.S. Treasury note slid as low as
0.318% - a level unthinkable just a week ago - and German
government debt yields set fresh record lows as investors rushed
to cut risk assets and snap up safe-havens. Gold briefly topped
$1,700 an ounce for the first time since 2012 and is up more
than 10% so far this year.
The rout's depth, sparked after Saudi Arabia stunned markets
on Sunday with plans to hike oil production sharply following
the collapse of the Organization of the Petroleum Exporting
Countries' supply-cut agreement with Russia, unnerved investors.
"The oil price plunge adds a huge disruptive dynamic to
markets that are already very fragile," said Paul O'Connor,
multi-asset head at Janus Henderson in London.
"We are seeing this week, finally, a full-scale liquidation
and signs of capitulation, full-scale panic - we see this in
every asset," O'Connor said.
Mike Loewengart, managing director of Investment Strategy at
E*TRADE Financial Corp, said in an email that as markets move at
breakneck speeds wide price swings are never comfortable.
"Consistent patterns of whipsawed equities and plummeting
Treasury yields have certainly unnerved investors and the latest
domino to fall is severe oil losses," Loewengart said.
"No doubt, many are taking a hard look at their portfolio."
Jim Vogel, interest rate strategist at FHN Financial in
Memphis, Tennessee, said "nobody thought that Saudi Arabia would
start a price war. Suddenly you have to re-evaluate what else
could impact this."
Saudi Arabia's grab for market share was reminiscent of a
drive in 2014 that sent prices down by about two-thirds, while
the renewed plunge on Wall Street came exactly 11 years after
U.S. stocks touched bottom during the financial crisis.
Brent and U.S. crude futures slid $14 a
barrel to as low as $31.02 and $27.34 in volatile trade.
Both crude benchmarks recouped some losses but still fell
almost 25% in their biggest daily drop since 1991, the start of
the first Gulf War.
Brent fell $10.91 to settle at $34.36 a barrel,
while U.S. crude settled down $10.15 at $31.13 a barrel.
The Dow fell a record 2,000 points when trading opened and
the S&P 500 posted its largest single-day percentage drop since
December 2008, the depths of the financial crisis.
All three of Wall Street's major benchmarks - the Dow
industrials, S&P 500 and Nasdaq composite - were roughly 1
percentage point shy of bear territory.
The Dow fell 2,013.76 points, or 7.79%, to 23,851.02.
The S&P 500 lost 225.81 points, or 7.60%, to 2,746.56 and
the Nasdaq dropped 624.94 points, or 7.29%, to 7,950.68.
Equity markets in Frankfurt and Paris
tumbled about 8.5% and London tanked 11%. Italy's main
index slumped 14.3% after the government over the
weekend ordered a lockdown of a northern swath of the country,
including the financial capital, Milan.
The pan-regional STOXX 600 fell into bear territory
from an all-time high in February. Oil stocks bore the brunt of
losses, with giants BP 19.5% lower and Royal Dutch Shell
off 18.2% as the European energy sector slid
to its lowest since 1997.
The losses in Europe amplified declines in Asia. MSCI's
broadest index of Asia-Pacific shares ex-Japan
lost 4.4% in its worst day since August 2015 and Japan's Nikkei
dropped 5.1%. Australia's commodity-heavy market
closed down 7.3%, its biggest single-day fall since 2008.
'DO SOMETHING!'
Investors piled into safe-haven debt, driving the 30-year
U.S. Treasury yield below 1% on bets the Federal
Reserve will cut interest rates by at least 75 basis points when
policymakers meet next week. The Fed last week cut rates by half
a percentage point after an emergency meeting.
The number of people worldwide infected with the coronavirus
rose above 111,600, and 3,800 have died.
There were mounting worries that debt-heavy U.S. oil
producers would be unable to meet financial obligations as the
drop in prices slashes their revenue.
"No one expected this. We were trending downwards, but no
one expected this magnitude," said Donald Selkin, chief market
strategist at Newbridge Securities in New York.
"The lower oil price is going to decimate oil stocks, the
oil industry, the shale producers and the record low interest
rates are going to decimate the banks," he said.
ECB MEETING
The European Central Bank meets on Thursday and will be
under intense pressure to act, but rates are already deeply
negative.
The 10-year Bund yield - the euro zone's leading
safe asset - fell to a record low of -0.906%, while inflation
expectations for the euro zone sank below 1% for the first time.
Data suggested the global economy toppled into recession
this quarter. Figures from China over the weekend showed exports
fell 17.2% in January-February from a year earlier.
The fall in U.S. yields and Fed rate expectations pushed
the dollar to its largest weekly loss in four years before it
recovered some ground..
The dollar extended its slide to 101.20 yen, depths
not seen since late 2016. It was last down 3.1% at 102.07.
The euro shot to the highest in over 13 months at $1.1492
and was last at $1.1431.
Gold retreated from the $1,700 level it briefly
touched as investors sold bullion to cover margin calls in
plummeting securities, overshadowing the metal's safe-haven
status.
U.S. gold futures settled up 0.2% at 1,675.70 an
ounce.
(Reporting by Herbert Lash; Additional reporting by Ira
Iosebashvili in New York, Sruthi Shankar in Bangalore, Ross
Kerber in Boston, Sujata Rao and Thyagaraju Adinarayan in
London, Wayne Cole in Sydney and Sumeet Chatterjee in Hong Kong,
Editing by Catherine Evans, Timothy Heritage, Toby Chopra, Dan
Grebler and Tom Brown)
