* Unease over record virus cases in Europe, U.S.
* German DAX hits three-month low as SAP slumps
* Investors seek dollar safety
* Italy bond yields slide after S&P move
* Eyes this week on central bank meetings, U.S. GDP data
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
By Tom Arnold and Wayne Cole
LONDON/SYDNEY, Oct 26 (Reuters) - Global shares fell on
Monday as surging coronavirus cases in Europe and the United
States clouded the global economic outlook, while China's
leaders meet to plan the country's economic future.
The United States has seen its highest-ever number of new
COVID-19 cases in the past two days. France also set case
records and Spain announced a state of emergency.
The coronavirus resurgence, along with no clear progress on
a U.S. stimulus package and caution before the Nov. 3 U.S.
election, dragged the MSCI world equity index
down 0.3%. In Europe, the Euro STOXX 600 shed 1%. S&P
500 futures fell 1%.
"The decreasing likelihood of U.S. fiscal stimulus
pre-election, possibly even pre-year-end, as well as worsening
virus numbers and increasing lockdown measures, all seem to be
taking the shine off what was a rather complacent market view of
the outlook," said James Athey, investment director at Aberdeen
Standard Investments.
Europe became the second region after Latin America to
surpass 250,000 deaths on Saturday, according to a Reuters
tally, as many European countries reported their highest number
of COVID-19 cases in a single day.
Milan's blue-chip index sank 1% as new curbs on
public venues overshadowed Friday's news that ratings agency S&P
Global had upgraded the nation's sovereign outlook to stable
from negative.
The German DAX slumped 2.7% to a three-month low
after software company SAP abandoned medium-term
profitability targets and warned its business would take longer
than expected to recover from the pandemic.
Sentiment was also hit by a survey showing German business
morale fell for the first time in six months in October.
Reports of progress in a COVID-19 vaccine being developed by
the University of Oxford and manufactured by drug maker
AstraZeneca Plc helped limit some of the market
sell-off, analysts said.
MSCI's broadest index of Asia-Pacific shares outside Japan
shed 0.2%. Japan's Nikkei finished 1%
lower, and South Korea's main index lost 0.7%.
Chinese blue chips shed 0.6% as the country's
leaders met to chart the nation's economic course for 2021-2025,
balancing growth with reforms amid an uncertain global outlook
and worsening relations with the United States.
In a packed week for monetary policy decisions, Canada's and
Japan's central banks are expected to hold fire for now. Markets
assume the European Central Bank will sound cautious on
inflation and growth even if it skips a further easing.
Data due out Thursday is forecast to show a consumer-led
31.9% rebound in U.S. economic output in the third quarter,
after the second quarter's historic collapse.
Analysts at Westpac noted such a bounce would still leave
2020 GDP around 4% below last year's, with business investment
still lagging badly.
As markets increasingly price in the likelihood of a
Democratic president and Congress and resulting rise in
government spending and borrowing, U.S. 10-year Treasury yields
hit their highest since early June last week at 0.8720%
. They were trading at 0.81% on Monday.
"We have raised the probability of a Democratic sweep,
already our base case, from 40% to just over 50% and have
increased our expectation of Biden to win from 65% to 75%,"
NatWest Markets analysts said. "We see steeper U.S. yield curves
and a weaker USD as likely to prevail in our base case."
Italian government bond yields slid across the curve, with
short-dated yields falling to a one-year low, after S&P Global's
unexpected outlook upgrade.
The benchmark 10-year yield dropped 6 basis points to 0.70%
. Short-dated two-year Italian yields hit
their lowest level in a year at -0.382%.
Surging coronavirus cases sent investors to the safety of
the dollar after it fell broadly last week.
An index tracking its value against a basket of currencies
firmed 0.1% to 92.92, while euro/dollar - the most traded
currency pair and part of the index - fell 0.3% to 1.1826
.
In commodity markets, gold was 0.1% higher at
$1,902.06 per ounce.
Oil prices extended last week's losses as the prospect of
increased supply and resurgent coronavirus infections worried
investors.
Brent crude was down 1.9% at $40.97 a barrel. U.S.
West Texas Intermediate (WTI) dropped 2.1% to $39.03.
(Reporting by Tom Arnold in London and Wayne Cole in Sydney;
editing by Shri Navaratnam, Tomasz Janowski, Larry King)
Astrazeneca (AZN)
