(Adds gold, oil settlement prices)
* 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
* Fed funds fully price for 75 bps cut in March
* 30-year Treasury yields drop below 1%, drag dollar down
* 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 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.
Jim Vogel, interest rate strategist at FHN Financial in
Memphis, Tennessee, said that "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 was poised for its largest single-day percentage
drop since December 2008, the depths of the financial crisis.
The benchmark index was almost 19% below its all-time high
of Feb 19 - just 1 percentage point shy of bear territory.
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 large parts of the north of the
country, including the financial capital, Milan.
The pan-regional STOXX 600 fell into bear market
territory from an all-time high in February. Oil stocks bore the
brunt of losses, with energy giants BP 19.5% lower and
Royal Dutch Shell off 18.2%.
The energy sector in Europe was at lowest since 1997.
The losses in Europe followed sharp 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 daily fall since 2008.
'DO SOMETHING!'
Investors piled into safe-haven debt, driving the 30-year
U.S. Treasury yield below 1% on bets that the
Federal Reserve will cut interest rates by at least 75 basis
points when policy-makers meet next week.
The Fed last week cut rates by half a percentage point after
an emergency meeting.
Katie Nixon, chief investment officer at Northern Trust
Wealth Management in Chicago, said people know the turbulence
will pass as in past crises and that ultimately, markets
recover, but emotions can overcome rational behavior.
"Our hearts, however, tell us to, 'Do something!' The sense
of market chaos feeds into our most damaging behavioral biases,"
Nixon said in a note to high net-worth clients.
The number of people worldwide infected with the coronavirus
rose above 111,600, and 3,800 have died from the virus.
There were mounting worries that U.S. oil producers carrying
a lot of debt would be made uneconomic by the price drop.
The mood was also hit by North Korea's firing three
projectiles off its eastern coast.
BOND BONANZA
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 Herb Lash; Additional reporting by 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 and Dan Grebler)
BP (BP.)
