* Hopes of central bank stimulus lift global shares
* ECB says stands ready to take targeted measures
* G7 conference call planned later on Tuesday
* Australia central bank cuts policy interest rate
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones and Karin Strohecker
LONDON, March 3 (Reuters) - Global stocks and commodity
markets extended a tentative recovery from their coronavirus
slump on Tuesday, as global policymakers signalled a united
front to address the economic fallout from the spreading
outbreak.
Europe's main bourses climbed 2% or more in early trade in
London .FTSE , Frankfurt .GDAXI , Paris .FCHI and Milan
.FTMIB . MSCI's world stocks index .MIWD00000PUS rose 0.5%.
Finance ministers from the G7 and central bank governors will
hold a conference call on Tuesday (1200 GMT) to discuss measures
to deal with the outbreak.
According to a source at the group, a statement it is
crafting does not detail any firm fiscal or monetary stimulus
plans, however. "The market is very much wanting a coordinated policy
response, but the question here is whether a conventional
interest-rate response is sufficient, or whether it requires
also a fiscal response," said Sameer Goel at Deutsche Bank.
"The problem is, the severity of the problem is not very
clear."
The recovery in risk appetite saw a mild selloff in safe
haven bonds after yields had hit record or long-term lows in
recent days as worries about the prospect of a global recession
had mounted.
The decision to hold a call came after the head of the
European Central Bank, Christine Lagarde, on Monday joined the
chorus of central banks signalling a readiness to deal with the
threat from the outbreak. Earlier messages from the U.S. Federal Reserve that it was
prepared to act weighed on the greenback.
The improved sentiment helped U.S. S&P 500 futures ESc1
climb up as much as 1% in Asian trade on Tuesday but they
trimmed gains to 0.1% following reports on the G7 draft
statement lacking firm or immediate commitments.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was 0.8% higher, off earlier highs but still
marking the second straight session of rises.
"Barring any further deterioration of the coronavirus
outbreak, we believe that the global cyclical recovery is likely
to gain further momentum," Schroders' Asian multi-asset team
said in a report.
"This is likely to benefit stocks with higher leverage to
global growth, as stronger earnings could support dividend
growth."
MONEY MARKETS
Japan's Nikkei .N225 lost steam and closed 1.2% lower
after short-covering ran its course and as the yen firmed on the
dollar, but South Korea's Kospi .KS11 rose 0.6%.
Australian shares .AXJO ended up 0.7% after the central
bank cut interest rates to a record low of 0.5%, the fourth
reduction in less than a year. The rout in global stocks last week had already prompted Fed
Chair Jerome Powell and Bank of Japan Governor Haruhiko Kuroda
to flag a readiness to move.
Money markets are fully pricing in a cut of at least 0.25
percentage point to the current 1.50%-1.75% target rate at the
Fed's March 17-18 meeting as well as a 0.10 percentage point cut
to the ECB's key rate at March 12 meeting.
The frantic moves by policymakers reflected growing fears
that the disruption to supply chains, factory output and global
travel caused by the new epidemic could deal a serious blow to a
world economy trying to recover from the U.S.-China trade war.
Coronavirus now appears to be spreading much more rapidly
outside China than within the country, leading the world into
uncharted territory, although the World Health Organization has
so far stopped short of calling it a pandemic. U.S. bond yields roll back some of their sharp falls.
The 10-year U.S. Treasuries yield moved to
1.1174% US10YT=RR from a record low of 1.030% marked on Monday.
The rate-sensitive two-year notes yield US2YT=RR jumped back
to 0.8452% from Monday's 3 1/2-year low of 0.710%.
April Fed funds rate futures FFJ0 still price in about 80%
chance of a 0.50 percentage point cut this month and a total of
almost 1 percentage point cuts by the end of year.
Expectations of Fed rate cuts prompted investors to cut
dollar exposure.
Against the yen, the dollar lost 0.5% to 107.8 yen JPY= ,
slipping towards a five-month low of 107 set on Monday.
The euro was a shade higher at $1.1146 EUR= , having hit an
eight-week peak of $1.1185 in the previous session.
The Australian dollar AUD=D3 sat above a recent 11-year
trough largely on short covering after the cut in interest
rates. Oil prices gained another 2% after a jump of more than 4% on
Monday. U.S. West Texas Intermediate crude futures CLc1 to
$47.8 a barrel while Brent crude LCOc1 stood at $52.9. O/R