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GLOBAL MARKETS-Shares fall sharply, investors seek safety as COVID-19 cases rise

Published 21/09/2020, 09:59 pm
Updated 21/09/2020, 10:00 pm
© Reuters.

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

* For Reuters Live Markets blog please click on: LIVE/

(Updates prices, adds comment and chart)

By Elizabeth Howcroft

LONDON, Sept 21 (Reuters) - Markets turned risk-averse on Monday and European shares hit their lowest in seven weeks as rising COVID-19 infection rates in Europe prompted renewed lockdown measures, casting doubt over economic recovery.

The MSCI world equity index .MIWD00000PUS , which tracks shares in 49 countries, was down 0.8% at 1113 GMT.

European indexes fell sharply, with the pan-European STOXX 600 down 2.7% .STOXX , its lowest since the start of August.

London's FTSE 100 was at a two-week low, down 3.3% .FTSE and Germany's DAX fell 3.2% .GDAXI . losses were in part due to rising COVID-19 cases in Europe, said Samy Chaar, chief economist at Lombard Odier.

"This is not extremely new today but you do feel that in the past days it has kind of unsettled market participants a bit because they have this new threat of localised lockdowns," he said.

European countries including Denmark, Greece and Spain have introduced new restrictions on activity. is considering a second national lockdown as new cases rise by at least 6,000 per day. health minister said rising new infections in countries like France, Austria and the Netherlands is worrying. were also hit by a media report on how several global banks moved large sums of allegedly illicit funds over nearly two decades. shares slid after the report and HSBC HSBCUK.UL shares sunk to a 25-year low in Hong Kong. a weak Asian session, the equity market decline accelerated when European markets opened and started to stabilise around 1030 GMT.

S&P 500 futures and Nasdaq 100 futures were both down 1.8% ESc1 NQc1 . RISING'

Investors will be looking ahead to flash PMI data on Wednesday for the first hints of how economies have fared in September.

"Concerns are rising that the summer recovery is probably as good as it gets when it comes to the recent rebound in economic activity," wrote Michael Hewson, chief market analyst at CMC Markets UK.

"This reality combined with the growing realisation that a vaccine remains many months away, despite President (Donald) Trump's claims to the contrary, has made investors increasingly nervous, as we head into an autumn that could see lockdowns reimposed," he said.

The dollar declined for the second week running last week, hurt by the U.S. Federal Reserve's commitment to keeping rates lower for longer.

But it rose on Monday, with the dollar index up 0.4% at 93.297 at 1132 GMT =USD as investors sought safer currencies. yen gained against the dollar for the sixth consecutive session JPY=EBS , while the riskier Australian and New Zealand dollars AUD=D3 NZD=D3 , and Norwegian and Swedish crowns, lost out NOK=D3 SEK=D3 .

Seven members of the Fed will speak this week - including chairman Jerome Powell appearing before Congressional committees - so investors will be looking for hints to determine the dollar's direction.

The euro was down 0.4% at $1.179 EUR=EBS , while the safe Swiss franc rose against the euro EURCHF=EBS .

The benchmark 10-year German government bond yield was down 3 basis points at -0.517% DE10YT=RR , with most high-rated euro zone government bond yields down by 2-4 bps at 1137 GMT.

The European Central Bank will review how long its emergency pandemic bond purchase scheme should go on, the Financial Times reported. European Council meets in a summit on Thursday and Friday this week.

Elsewhere, oil prices fell, with Brent crude LCOc1 down 2% at $42.29 a barrel at 1138 GMT, while U.S. crude CLc1 was down 2% at $40.28 a barrel. prices fell, with spot gold XAU= down 1% at $1,930.41 per ounce by 1139 GMT. has public holidays on Monday and Tuesday this week, meaning volumes are thin in Asian trading.

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http://tmsnrt.rs/2ihRugV World stocks vs COVID-19 confirmed cases

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