* Europe's STOXX 600 slumps 0.9%
* Virus toll rises, WHO to reconsider declaring emergency
* Economists slash China growth forecasts
* U.S. yield curve inverts as safe-haven assets sought
* Oil falls over 2%
* BOE keeps rates steady; press conference due at 1230 GMT
* Sterling rises 0.5% vs. dollar
* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
(Updates prices throughout)
By Tom Wilson
LONDON, Jan 30 (Reuters) - Stocks across the world tumbled
on Thursday as the death toll from a virus spreading in China
reached 170, forcing airlines to cut flights and stores to close
as the potential economic hit from the outbreak came into focus.
The MSCI world equity index, which tracks
shares in 49 countries, fell 0.5% as European shares followed
Asian indexes into the red, stoking demand for the perceived
security of safe-haven assets from bonds to gold and pushing oil
down 2%.
Europe's broad STOXX 600 fell 0.9%, with indexes in
Frankfurt and Paris down 1.2% and 1.4%
respectively.
Shares in London fell 1.2%, extending losses as the
pound climbed against the dollar after the Bank of England kept
interest rates unchanged.
Disappointing earnings and trading updates weighed further
on blue-chip stocks, adding to the gloom. Royal Dutch Shell
fell 4.8% before clawing back some losses after
fourth-quarter profit halved to its lowest in more than three
years.
U.S. stock futures pointed to a negative open on Wall
Street.
The number of confirmed deaths from the virus in China has
climbed to 170 with 7,711 people infected, and more cases are
being reported around the world.
Chinese factories have extended holidays, global airlines
cut flights and Sweden's IKEA said it would shut all stores in
China.
Investors started to gauge the impact of the travel and
trade restrictions, with one Chinese government economist saying
first-quarter growth in the world's No.2 economy could be
reduced by one point to 5% or lower and that sectors from mining
to luxury goods would be hit.
Investment banks also started to put figures on what the
damage could be. JPMorgan and ING said they expected China’s
2020 growth rate to slow to 5.6% from 6.1% last year. Citi has
said it expects growth to slow to 5.5% from its previous
prediction of 5.8%, with the sharpest slowdown this quarter.
Others cautioned that estimates were hard to make.
"The economic impact will be determined by the extent to
which it spreads," said Michael Bell, global market strategist
at J.P. Morgan Asset Management, adding that hard evidence of a
hit to economic data was needed before the impact of the virus
could be judged.
Federal Reserve Chairman Jerome Powell acknowledged on
Wednesday the risks from any slowdown in the Chinese economy,
but said it was too early to judge the impact on the United
States.
Benchmark U.S. and German government bond yields fell
sharply, with 10-year German bund yields dropping to a
three-month low.
U.S. 10-year Treasuries also fell 3 basis points to 1.5600%,
their lowest since October. The yield curve - as
measured by the gap between 10-year and three-month note and a
closely watched indicator of looming recession - fell again into
negative territory.
Gold edged 0.2% higher.
Oil prices, seen a barometer of the expected impact of the
virus on the world's economy, fell 2.4%. By shortly after noon,
Brent crude was down 95 cents, or $58.39 a barrel.
The World Health Organization's Emergency Committee was due
to reconvene later in the day to decide whether the rapid spread
of the virus now constitutes a global emergency.
Chris Weston, head of research at Melbourne brokerage
Pepperstone, said: "The fear is that they might raise the alarm
bells."
Earlier, MSCI's broadest index of Asia-Pacific shares
outside Japan fell 2.1% to a seven-week low and
has now dropped for six straight sessions. Indexes in Japan
, Hong Kong and Taiwan all fell.
STEADY RATES
In Europe, the pound jumped 0.5% after the Bank of
England kept interest rates on hold.
The central bank said signs that Britain's economy had
picked up since December's parliamentary election, and of a more
stable global economy, meant more stimulus was not needed now.
The BOE had appeared close to cutting rates for the first
time in more than three years, with investors pricing in a 45%
chance that the BOE would cut rates to 0.5% from 0.75%.
Sterling was last at $1.3082 against the dollar, and up 0.3%
against the euro at 84.31 pence.
Elsewhere in currencies, there was a risk-averse mood, with
exposed Asian currencies and commodities sensitive to Chinese
demand extending losses as economists made deep cuts to their
China growth forecasts.
The Chinese yuan reversed Wednesday's gains to fall
0.4% to its lowest level since Dec. 30, breaking through the key
level of 7 against the dollar.
The Australian dollar and the kiwi dollar
both lost 0.3%.
The Japanese yen rose 0.2% against the dollar, while
the Swiss franc, also seen as a safe haven, also gained.
The dollar against a basket of six major currencies
was flat.
For Reuters Live Markets blog on European and UK stock
markets, please click on:
(Reporting by Tom Wilson in London, Tom Westbrook in Singapore,
Swati Pandey in Sydney; Editing by Jacqueline Wong, Andrew
Cawthorne and Timothy Heritage)
