* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Futures point to gains in European, U.S. shares
* Massive fiscal and monetary stimulus offers lifeline
* Dollar holds big weekly gains, strains $ borrowers
* Oil firms after largest daily rally on record
By Wayne Cole
SYDNEY, March 20 (Reuters) - Asian shares made a partial comeback from a global rout on Friday but still nursed massive losses for the week, while bonds rallied and oil extended its gains.
European shares were set for similar gains. Early in the European day, pan-region Euro Stoxx 50 futures STXEc1 were up 1.87%, German DAX futures FDXc1 gained 1.86% and FTSE futures FFIc1 .
U.S. S&P 500 e-mini stock futures ESc1 also pointed to a brighter end to the week, adding 1.7%.
In afternoon trade in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was 4.41% higher, ending a seven-sessions streak of losses.
But in an indication of the deep damage inflicted on global equities from pandemic fears, the index remains set to finish more than 10% lower this week. It lost 11.1% last week.
As the spread of the coronavirus brought much of the world to a halt, nations have poured ever-more-massive amounts of stimulus into their economies while central banks have flooded markets with cheap dollars to ease funding strains. U.S. Senate was debating a $1 trillion-plus package that would include direct financial help for Americans, relief for small businesses and steps to stabilise the economy. told Reuters that China was set to unleash trillions of yuan of fiscal stimulus to revive an economy facing its first contraction in four decades, though on Friday the country surprised markets by keeping its lending benchmark unchanged. speed and aggression with which authorities are wheeling out measures to cushion the economic fallout from the virus and sowing the seeds for a hopefully rapid recovery, has resonated somewhat in equity markets," said Ray Attrill, head of FX strategy at NAB.
"Yet there is little doubt that funds need to buy dollars to rebalance hedges in light of the 30% fall in equity markets so far this month," he added. "The dollar remains the pre-eminent safe-haven asset during times of extreme market stress."
The dollar's surge is a nightmare for the many countries and companies that have borrowed heavily in the dollar, leading to yet more selling of emerging market currencies in a negative feedback loop.
Such was the stress that dealers hear whispers of a new Plaza Accord, the 1985 agreement when major central banks used mass intervention to restrain a rampant dollar.
For now, investors in Asia were merely happy Wall Street had not plunged again and South Korean shares .KS11 bounced 7.4%, though that still left them down more than 11% for the week.
Australia's beleaguered market .AXJO eked out a 0.70% gain, and futures for Japan's Nikkei .N225 were trading up at 17,710, compared to a cash close of 16,552.
OIL RELIEF
Aiding sentiment was a 25% rally in oil prices overnight.
U.S. crude CLc1 was 3.25% higher at $26.04 a barrel on Friday, up from a low of $20.09, while Brent crude LCOc1 stood at $29.14. O/R
This was a major relief as the collapse of crude prices had blown a huge hole in the budgets of many oil producers and forced them to dump any liquid asset to raise cash, with U.S. Treasuries a particular casualty.
That was one reason yields on U.S. 10-year Treasuries US10YT=RR had climbed over 100 basis points in just nine sessions to reach 1.279%, before steadying a little at 1.1533%.
At the same time, funds across the world were fleeing to the liquidity of U.S. dollars, lifting it to peaks last seen in January 2017 against a basket of its peers =USD .
"Such price action suggests significant market stress, particularly on the wide range of entities outside the U.S. that have borrowed in dollars," said Richard Franulovich, head of FX strategy at Westpac.
"It could last until global capital flows and investor risk appetite normalises, possibly months away."
The euro rose 0.65% to $1.0759 EUR= but was not far off three-year lows, having shed more than 3% for the week so far - the steepest decline since mid-2015. The dollar did ease back to 109.88 yen JPY= , but was still up nearly 1.9% on the week.
Sterling continued its wild swings with a rally to $1.1677 GBP= , having earlier hit its lowest since 1985 around $1.1404. It was still down nearly 5% for the week.
The jump in the dollar has made gold more expensive in other currencies. While it rallied on Friday to $1,494.48 per ounce, it remains down about 2.5% on the week. XAU= GOL/
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