* U.S. crude climbs above zero, Brent at $25.78
* Asian stocks post steepest drop since March
* Eikon users click here https://apac1.apps.cp.thomsonreuters.com/cms/?navid=919104201 for an overview of virus news
By Tom Westbrook
SINGAPORE, April 21 (Reuters) - U.S. crude oil bounced back into positive territory on Tuesday, but a historic plunge below zero rattled investors and triggered the steepest drop in Asian stock markets in a month.
Traders could not give away West Texas Intermediate CLc1 overnight after a storage squeeze turned holders of the contracts expiring later on Tuesday to forced sellers. O/R
A $39 rise leaves the price for May delivery at $1.38 per barrel and investors unnerved about further dislocation.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 2%, as did the Nikkei .N225 , EuroSTOXX 50 futures STXEc1 and FTSE futures FFIc1 . E-mini futures for the S&P 500 ESc1 fell 0.5%, while bonds and the dollar rose.
"The (oil) price action was scary," said Kyle Rodda, market analyst at IG Markets in Melbourne. "It points to the fact that supply and demand has been destroyed."
The collapse also came together with more signs of a slow and difficult recovery from the COVID-19 pandemic.
The World Health Organization warned that any lifting of lockdowns to contain the spread of the novel coronavirus must be gradual, and if restrictions were to be relaxed too soon, there would be a resurgence of infections. Kong's government said it will extend restrictions aimed at tackling the coronavirus for another two weeks. Chancellor Angela Merkel cautioned shoppers rushing to just-reopened stores that lockdown measures could be tightened again if fresh cases arise. in the United States, a return to work is looking increasingly chaotic, as some states relax lockdowns while others urging caution faced demonstrators demanding an end to restrictions. is little room for complacency," DBS strategists Philip Wee and Eugene Leow said in a note.
"Weak oil prices and China's negative growth are reminders that the coronavirus has hurt demand."
Stock markets in Sydney .AXJO , Hong Kong .HSI and Shanghai .SSEC fell around 2%.
South Korea's KOSPI .KS11 and won KRW= dived after CNN reported that North Korean leader Kim Jong Un was gravely ill, but recovered somewhat after South Korean government sources said the story was untrue. IN OIL
Monday's plunge in U.S. crude came as the May contract expiry looms at the end of Tuesday trade. just above zero and June prices CLc2 at $21 per barrel point to some relief.
International benchmark Brent crude LCOc1 , more readily seaborne than its U.S. counterpart, held around $25.38 per barrel. That is still some 60% under January's peak, highlighting the disruption to energy consumption and the long road back to solid global growth that underpins oil demand.
"Even as, or if, virus containment measures ease in the coming weeks, the world is going to be awash in oil for some time," said Kerry Craig, global market strategist at J.P. Morgan Asset Management. "Economies may be slow to get back up and running to a pace that would warrant a strong increase in demand."
That had bond markets priced for caution and the safe-haven dollar in the ascendancy. The dollar rose against the euro, yen, pound and Antipodean currencies.
It last stood at $0.6300 per Aussie AUD=D3 and at a one-and-a-half week high of $1.2400 per pound GBP= .
The yield on benchmark 10-year U.S. Treasuries, which falls when prices rise, dropped under 0.6% to 0.5988% in afternoon trade.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Global assets
http://tmsnrt.rs/2jvdmXl Global currencies vs. dollar
http://tmsnrt.rs/2egbfVh Global bonds dashboard
http://tmsnrt.rs/2fPTds0 Emerging markets
http://tmsnrt.rs/2ihRugV MSCI All Country Wolrd Index Market Cap
http://tmsnrt.rs/2EmTD6j U.S. crude oil's historic crash below zero
https://reut.rs/2KmJk3e
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