* Stocks arrest slide as authorities tackle spread of virus
* Sterling rises sharply against the dollar
* Oil tumbles as Libya supply jitters dissipate
* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
(Updates death toll from virus; updates prices, market activity and comments)
By Rodrigo Campos
NEW YORK, Jan 22 (Reuters) - World stock markets bounced back on Wednesday, even as deaths from China's new virus rose to 17, while oil prices tumbled as a market surplus forecast alleviated supply concerns.
Worries about contagion of the virus and its effect on the global economy, particularly as millions travel for upcoming Lunar New Year festivities, had knocked the world's top equity markets off record peaks.
Official newspaper China Daily on Wednesday said 544 cases had now been confirmed in the country. Cases of the previously unknown, flu-like coronavirus have emerged as far away as the United States. outbreak revived memories of the Severe Acute Respiratory Syndrome (SARS) epidemic in 2002-03, a virus outbreak that killed nearly 800 people worldwide and hit Hong Kong's economy particularly hard.
Though Hong Kong confirmed its first case measures are now in place to minimize public gatherings in the most affected regions.
"The call here is not that the virus is done or nipped in the bud by any means," said Kay Van-Petersen, global macro strategist at Saxo Capital Markets. "But there have been no big further reported outbreaks, and the response from the Chinese authorities has been very, very positive". DAX .GDAXI touched an intraday record high but ended the day down 0.3%. Italy's benchmark fell after reports the leader of its co-governing 5-Star movement had resigned. government bonds saw their biggest sell-off in a month. Yields, a proxy of the country's borrowing costs, jumped as investors wondered whether the country's fragile coalition would collapse. GVD/EUR
Across the Atlantic, the S&P 500 hit a record high boosted by waning fears over the coronavirus. An airline stock index .XAL rose 1.0% after falling as much as 3.8% on Tuesday.
IBM IBM rallied 3.1% after better-than-expected full-year profits, while streaming giant Netflix NFLX.O warned the next few months would be tougher and its stock fell 3.1%. .N
The Dow Jones Industrial Average .DJI rose 31.05 points, or 0.11%, to 29,227.09, the S&P 500 .SPX gained 8.7 points, or 0.26%, to 3,329.49 and the Nasdaq Composite .IXIC added 49.30 points, or 0.53%, to 9,420.11.
The pan-European STOXX 600 index .STOXX lost 0.08% and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.25%. Emerging market stocks .MSCIEF rose 0.63%.
Overnight, the coronavirus developments boosted Shanghai stocks .SSEC from an early 1.4% drop to end higher. Japan's Nikkei .N225 , South Korea's Kospi index .KS11 and Hong Kong's Hang Seng .HSI all rose by more than half a percentage point.
NO PANIC, CAUTION
Companies across China are handing out masks and warning staff to avoid the central city of Wuhan amid fears that the virus will rapidly spread as much of the population embarks on travel for Lunar New Year holidays. dollar index .DXY rose 0.05%, with the euro EUR= up 0.03% to $1.1085.
The Japanese yen strengthened 0.01% versus the greenback at 109.88 per dollar, while Sterling GBP= was last trading at $1.3124, up 0.59% on the day.
Oil prices fell sharply as traders figured a well-supplied global market would be able to absorb disruptions that have cut Libya's crude production. O/R
U.S. crude CLc1 fell 2.52% to $56.91 per barrel and Brent LCOc1 was last at $63.33, down 1.95% on the day.
U.S. 2-year, 10-year and 30-year yields were little changed but earlier hit fresh two-week lows after the Bank of Canada held interest rates steady and opened the door for possible easing amid an economic slowdown, rekindling worries about global growth. US/
"Going into this year, the belief was that global easing was over and things were looking better for the entire world," said Jim Vogel, senior rates strategist at FHN Financial in Memphis.
"For Canada to sort of change its outlook fairly quickly opens up the possibility that easing could occur elsewhere too," he added.
Benchmark 10-year notes US10YT=RR last rose 1/32 in price to yield 1.7673%, from 1.769% late on Tuesday.
Spot gold XAU= fell 0.07% to $1,557.84 an ounce. U.S. gold futures GCc1 gained 0.01% to $1,556.50 an ounce. Copper CMCU3 lost 0.92% to $6,103.50 a tonne.
http://tmsnrt.rs/2egbfVh
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