* Oil crashes more than 30% as Saudi Arabia cuts prices
* Energy firms suffer double-digit drops
* Pan-Europe stocks enter bear market
* Nikkei sinks more than 5%, S&P 500 futures down 4.9%
* Fed funds fully price for 75 bps cut in March, chance of
100 bps
* 30-year Treasury yields drop below 1%, drag dollar down
* Yen surges as Russian rouble, Mexican peso in free-fall
* U.S. crude vs energy sector ETFs: https://tmsnrt.rs/2TPLlcD
By Karin Strohecker, Wayne Cole and Sumeet Chatterjee
LONDON/SYDNEY/HONG KONG, March 9 (Reuters) - Global stocks
plunged on Monday and prices for crude oil tumbled as much as
33% after Saudi Arabia launched a price war with Russia, sending
investors already panicked by the coronavirus fleeing for the
safety of bonds and the yen.
Saudi Arabia had stunned markets with plans to raise its
production significantly after the collapse of OPEC's supply cut
agreement with Russia, a grab for market share reminiscent of a
drive in 2014 that sent prices down by about two thirds.
The shock in oil was seismic, with Brent crude
futures sliding $12 to $33.20 a barrel in chaotic trade, while
U.S. crude shed $11.80 to $29.48.
European markets suffered hefty losses in early trade with
London dropping more than 8%, Frankfurt falling
more than 7% and Paris almost matching those losses.
The pan-regional STOXX 600 tumbled into bear market
territory -- a drop of more than 20% from recent peaks. Oil
stocks suffered massive losses with Tullow down 57% and
BP down 27% in early trade.
In Asia, stocks and emerging market currencies with exposure
to oil tumbled in volatile trade while the safe-haven yen
surged.
Heavy selling was set to continue on Wall Street with U.S.
futures hitting their down limit.
Investors drove 30-year U.S. bond yields beneath 1% on bets
the Federal Reserve would be forced to cut interest rates by at
least 75 basis points at its March 18 meeting, after having
already delivered an emergency easing last week.
"Wild is an understatement," said Chris Brankin, Chief
Executive at stockbroker TD Ameritrade Singapore.
"Not just us, but across the globe you would have every
broker/dealer raising their margin requirements ... trying to
basically protect our clients from trying to leverage too much
risk or guess where the bottom is."
MSCI's broadest index of Asia-Pacific shares outside Japan
lost 4.4% in its worst day since August 2015,
while Shanghai blue chips fell 2.9%.
Japan's Nikkei dropped 5.1% and Australia's
commodity-heavy market closed down 7.3%, its biggest
daily fall since the 2008 global financial crisis.
The number of people infected with the coronavirus topped
110,000 across the world as the outbreak reached more countries
and caused more economic carnage.
Most of Italy's stocks failed to open after the government
ordered a lockdown of large parts of the north of the country,
including the financial capital Milan.
There were also worries that U.S. oil producers that had
issued a lot of debt would be made uneconomic by the price drop.
Not helping the mood was news North Korea had fired three
projectiles off its eastern coast on Monday.
"After a week when the stockpiling of bonds, credit
protection and toilet paper became a thing, let's hope we start
to see some more clarity on the reaction," said Martin Whetton,
head of bond & rates strategy at CBA.
"Dollar bloc central banks cut policy rates by 125 basis
points, not as a way to stop a viral pandemic, but to stem a
fear pandemic," he added, while noting that many central banks
had little scope to ease further.
BOND BUBBLE
A tectonic shift saw markets fully price in an
easing of 75 basis points from the Fed on March 18, while a cut
to near zero was now seen as likely by April.
The European Central Bank meets on Thursday and will be
under intense pressure to act, but rates there are already
deeply negative.
Urgent action was clearly needed, with data suggesting the
global economy toppled into recession this quarter. Figures out
from China over the weekend showed exports fell 17.2% in
January-February from a year earlier.
The yield on 10-year U.S. Treasuries last sat
at 0.4624% having halved in just three sessions.
Yields on the 30-year bond dived 35 basis points
on Friday alone, the largest daily drop since the 1987 crash,
and slid under 1% on Monday to reach 0.7020%.
The fall in yields and Fed rate expectations has pulled the
rug out from under the dollar, sending it at some point crashing
to the largest weekly loss in four years.
The dollar extended its slide in Asia to as far as 101.58
yen, depths not seen since late 2016. It was last down
nearly 3% at 102.28 in wild trade.
The euro likewise shot to the highest in over 13 months at
$1.1492, to be last at $1.1422.
Gold initially cleared $1,700 per ounce to a fresh
seven-year peak, only to fall back to $1,676.55 amid talk some
investors were having to sell to raise cash to cover margin
calls in stocks.
(Reporting by Karin Strohecker, Additional reporting by Wayne
Cole in Sydney and Sumeet Chatterjee in Hong Kong, Editing by
Catherine Evans
)
Tullow Oil (TLW)
BP (BP.)
