(Adds oil settlement prices)
By Herbert Lash
NEW YORK, June 15 (Reuters) - A gauge of global equities rebounded on Monday after the Federal Reserve widened its program of buying corporate debt, while crude oil rebounded too on signs fuel demand is recovering and as investors grapple with how to assess the economic reopening.
Stocks jumped after the Fed said its secondary market corporate credit facility would now include an indexing approach that would account for all U.S. corporate debt that satisfied minimum rating, maximum maturity and other criteria. wider program starts on Tuesday, the New York Fed said.
The Fed and other major central banks have sparked a rapid recovery in equity markets from a steep plunge in March by enacting a number of fiscal and economic stimulus programs, but investors have been uncertain about the economic recovery.
Fears of a second wave of COVID-19 infections had earlier rocked world markets, knocking down oil prices and major equity indices by more than 2% on Wall Street and Europe, and even more overnight in Asia.
MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.20% while the pan-European STOXX 600 index .STOXX closed down 0.27%.
Overnight in Asia, Japan's Nikkei .N225 fell 3.5% and South Korean shares .KS11 tumbled 4.8%.
On Wall Street, the Dow Jones Industrial Average .DJI rose 212.56 points, or 0.83%, to 25,818.1. The S&P 500 .SPX gained 30.7 points, or 1.01%, to 3,072.01 and the Nasdaq Composite .IXIC added 148.97 points, or 1.55%, to 9,737.77.
Investors were spooked after China re-introduced restrictions in some areas after Beijing reported its biggest cluster of new infections since February, and new cases and hospitalizations in record numbers also swept through more U.S. states, including Florida and Texas. showed factories in China stepped up production for a second straight month in May, giving investors hope, but also showed sustained contractions in retail sales and investment, suggesting many sectors were still struggling. elsewhere also was discouraging. Germany's Economy Ministry said economic output will fall further in the second quarter than in the first, and it warned the recovery later this year and beyond would be sluggish. are pricing a too-optimistic recovery, in my opinion, and there could be a reality check coming rather sooner than later," said Stephane Ekolo, an equity strategist at TFS Derivatives in London.
Crude oil cut losses and turned higher on signs members of the Organization of the Petroleum Exporting countries and allies were complying with a production cut, and on signs of rising fuel demand.
Prices rebounded after the energy minister of the United Arab Emirates voiced confidence that OPEC+ countries with poor compliance to agreed cuts would meet their commitments and reported signs oil demand was picking up. seemed to take away some of the market's negativity,"
"It's fear about the coronavirus versus the reality of what's happening on the ground," said Phil Flynn, senior analyst at Price Futures Group.
U.S. crude future CLc1 rose 86 cents to settle at $37.12 a barrel, while Brent futures LCOc1 settled up 99 cents at $39.72 a barrel.
U.S. Treasury yields rebounded on the Fed announcement, as investors set aside concerns over the spread of the coronavirus that dented risk appetite and boosted demand for safe-haven bonds.
Benchmark 10-year notes US10YT=RR rose 0.3 basis point to yield 0.7002%.
Euro zone bond yields edged down as investors bought safer assets such as government bonds.
Germany's 10-year bond yield DE10YT=RR earlier was near a three-week lows at -0.45%.
The dollar fell against a basket of trading currencies.
The dollar index =USD fell 0.485%, with the euro EUR= up 0.56% to $1.1317. The Japanese yen JPY= was flat versus the greenback at 107.36 per dollar.
"The market was pricing in a V-shape recovery. This can't be the case if there is indeed a second wave, the best scenario is U-shaped", said Steven Leung, executive director for institutional sales at Uob Kay Hian.
Worldwide coronavirus cases have crossed 7.86 million with 430,501 deaths, according to a Reuters tally. Asia stock markets
https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations
https://tmsnrt.rs/2Dr2BQA Asset performance vs outbreak
https://tmsnrt.rs/2YF3T1T Stocks and oil versus COVID-19 cases
https://tmsnrt.rs/3cXWNdO GRAPHIC-World FX rates
http://tmsnrt.rs/2egbfVh GRAPHIC-MSCI All Country World Index Market Cap
http://tmsnrt.rs/2EmTD6j GRAPHIC-Emerging markets
http://tmsnrt.rs/2ihRugV GRAPHIC-Global assets in 2020
http://tmsnrt.rs/2jvdmXl
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