Stock Markets Rally as Traders Assess Virus Impact on Economy

Stock markets rallied Tuesday, as trading floors assessed the early impact of China's deadly virus on the economy.

Asian and European indices climbed after gains overnight on Wall Street, while the dollar largely firmed. 

The pound recovered, after heavy falls Monday triggered by Britain and the European Union offering very different ideas regarding their new trade deal following Brexit.

Markets' main focus remained on authorities' efforts to contain an outbreak that has now infected over 20,400 people and killed more than the SARS epidemic that hammered Asian economies in 2003.

"Investors find themselves at an interesting, slightly difficult point in the coronavirus outbreak timeline," noted Connor Campbell, analyst at Spreadex trading group. 

"This has happened multiple times since the outbreak began, investors picking and choosing what developments they are willing to pay attention to.

"Further complicating matters is the fact... the impact on the Chinese economy won't really be known until the next batch of data out of the country," Campbell added.

Oil prices have tumbled since the deadly outbreak in the world's second-biggest economy, which is a huge consumer of crude.

And on Tuesday, Iraq's oil ministry said OPEC members and their ally Russia were discussing a further cut to crude oil output because of the epidemic.

The Organization of the Petroleum Exporting Countries is holding a meeting of a "joint technical committee" in Vienna on Tuesday and Wednesday to discuss the virus's impact and whether an output reduction is needed, it said.

Benchmark oil contract, Brent North Sea crude, slumped to $53.95 per barrel Tuesday -- the lowest level for 13 months, before recovering.

The WTI oil contract also hit the lowest level in 13 months, at $49.66 per barrel.

Around 1230 GMT, Brent had further recovered to $54.69 per barrel and WTI reached $50.65.

The virus has spread to more than 20 countries, while several have imposed tough travel rules including banning flights to and from China.

Meanwhile the World Health Organization has declared a global health emergency.

The virus was "inflicting a heavy blow" to China's economy, said National Australia Bank's David de Garis.

"It stands to reason that growth will be much weaker, even if there is ultimately a rebound of sorts next quarter on a quick passing of the viral epidemic," he added.

Shanghai's main stocks index rose 1.3 percent Tuesday -- boosted by China's central bank injecting around another $60 billion into the financial markets.

It had dived 8.0 percent Monday, with Chinese traders catching up with losses elsewhere while away for the long Lunar New Year break.   

- Key figures around 1230 GMT -

London - FTSE 100: UP 1.3 percent at 7,422.05 points 

Frankfurt - DAX 30: UP 1.3 percent at 13,208.88

Paris - CAC 40: UP 1.3 percent at 5,910.25

EURO STOXX 50: UP 1.4 percent at 3,712.14

Shanghai - Composite: UP 1.3 percent at 2,783.29 (close)

Hong Kong - Hang Seng: UP 1.2 percent at 26,675.98 (close)

Tokyo - Nikkei 225: UP 0.5 percent at 23,084.59 (close)

New York - DOW: UP 0.5 percent at 28,399.81 (close)

Euro/dollar: DOWN at $1.1052 from $1.1060 at 2200 GMT

Pound/dollar: UP at $1.3019 from $1.2995

Euro/pound: DOWN at 84.88 pence from 85.11 pence

Dollar/yen: UP at 109.06 yen from 108.69 yen

Brent Crude: UP 0.4 percent at $54.69 per barrel

West Texas Intermediate: UP 1.1 percent at $50.65 per barrel