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* Markets gain on investor hope of monetary, fiscal stimulus
* U.S. stocks up 4%, but Europe closes lower
* Oil prices bounce 8% after huge drop; gold prices fall 1%
By Herbert Lash and Marc Jones
NEW YORK/LONDON, March 10 (Reuters) - Oil and global equity
markets rebounded on Tuesday after the prior day's steep losses
as the world's biggest economies moved to cushion the impact of
the coronavirus, but stock gains in Europe failed to hold as
investors remained skittish.
The price of Brent crude roared back as much as 10% on hopes
a supply cut deal could be rescued and most benchmark government
bond yields rose from record lows as measures took shape to
confront the epidemic's economic and human toll.
U.S. President Donald Trump said he will ask Congress for a
payroll tax cut and other "very major" stimulus moves to ease
the economic pain, but details remain unclear.
Trump was heading to Capitol Hill to discuss what action
should be taken. During a White House meeting with heath
executives, he said the U.S. administration intended also to
help airlines and the cruise line industry.
Japan unveiled a second package of measures worth about $4
billion in spending, focusing on support to small and mid-sized
firms.
U.S. stocks jumped more than 3% at the open but pared gains
in choppy trade. Investors hoped Monday's rout marked the low of
a downturn that has pushed Wall Street's major indexes close to
a bear market - defined as a decline of 20% from recent peaks.
"Investors are trying put a bottom in here," said Rick
Meckler, partner at Cherry Lane Investments in New Vernon, New
Jersey.
The S&P 500 forward price-earnings ratio for this year fell
to 15.8 as of Monday, in line with the historic average and down
from 19.3 less than a month ago, according to Refinitiv.
"It seems like that yesterday was such a collection of so
much bad news, it shocked the market down. Today with fresh eyes
people are picking out the names they think have dropped the
most," Meckler said.
Comments by Vice President Mike Pence that private U.S.
health insurance companies have agreed to cover coronavirus
treatment and waive co-payment fees for testing helped U.S.
stocks rebound after briefly turning negative.
On Wall Street, the Dow Jones Industrial Average rose
949.48 points, or 3.98%, to 24,800.5 the S&P 500 gained
113.32 points, or 4.13%, to 2,859.88 and the Nasdaq Composite
added 322.95 points, or 4.06%, to 8,273.63.
MSCI's gauge of stocks across the globe
gained 2.03% but the pan-European STOXX 600 index lost
1.14%, solidly in a bear market.
The major European bourses declined after initial gains and
remained in bear territory. The FTSE 100 in London
almost eked out a gain but closed down 0.1% as oil companies
rebounded as Saudi Arabia and Russia engaged in a price war.
Oil heavyweights BP Plc and Royal Dutch Shell Plc
gained 3.4% and 3.7%, respectively, after closing
Monday with their worst session on record.
"Traders are a bit nervy, the only positive news we've been
getting out is probably rate cuts or tax cuts," said Michael
Baker, an analyst at ETX Capital in London.
"We need news in terms of the actual control of the virus,
which we don't seem to be having right now," he said.
Yields on benchmark U.S. 10-year Treasury debt more than
doubled to 0.70% and those on German Bunds jumped around 20
basis points at one point as investors pared some safe-haven
holdings, though they were beginning to ease again.
Many strategists and economists expect the Federal Reserve
to cut U.S. interest rates to zero as part of a global move to
provide strength and liquidity to the financial system.
The dollar rallied after huge losses against the safe-haven
Japanese yen and Swiss franc, but analysts said it was too early
to predict a floor.
Stocks in Asia rebounded, with Japan's Nikkei
closing up 0.85% after earlier touching its lowest level since
April 2017.
China's benchmark Shanghai Composite Index traded
2.1% higher as new domestic coronavirus cases tumbled and
President Xi Jinping's visit to the epicenter of the epidemic
lifted sentiment.
The oil rally had the most horsepower. About half of its
massive losses from Monday were clawed back, offering hope that
markets had found a floor despite still-fragile sentiment.
Russian oil minister Alexander Novak said he did not rule
out joint measures with the Organization of the Petroleum
Exporting Countries to stabilize the market.
Benchmark Brent crude futures rose 8.3% to settle at
$37.22 a barrel, roughly half this year's peak, reached in
January. U.S. crude gained 10.4% to settle at $34.36.
Gold prices fell 1%, retreating from the previous session's
jump above the key $1,700 level, as safe-haven demand waned a
little amid speculation about global stimulus measures.
U.S. gold futures settled down 0.9% at $1,660.30 an
ounce.
Analysts assume policymakers will have to respond
aggressively to prevent an economic crisis. The Fed on Monday
sharply stepped up the size of its fund injections into markets
to head off stress.
Investors are fully pricing an easing of at least 75 basis
points at the next Fed meeting on March 18, while a cut to near
zero was seen as likely by April.
The bond market has priced in a global recession of unknown
length.
Yields on 10-year U.S. Treasuries dipped to as
little as 0.318% on Monday - a level unthinkable just a week ago
- but climbed back to 0.6787% on Tuesday amid the stimulus
chatter.
(Reporting by Herb Lash; Additional reporting by Wayne Cole in
Sydney, Ambar Warrick; Editing by Catherine Evans, Richard Chang
and Dan Grebler)
