By Paulina Duran and Tom Westbrook
SYDNEY/SINGAPORE (Reuters) - Asian stock markets rallied for a second day on Tuesday and riskier currencies rose, on tentative signs the coronavirus crisis may be levelling off in New York and receding in Europe.
Gains, however, lacked Monday's momentum as the number of coronavirus cases kept rising globally and an economic crash on a scale not seen for generations looms large.
FTSE futures (FFIc1) gained 3.08% and EuroSTOXX 50 futures (STXEc1) rose 0.61%, pointing to a steady open in Europe, while U.S. stock futures (ESc1) were steady after trading either side of flat through the Asian day.
"At the moment Asian markets are leading their global counterparts and reacting with some optimism to speculation that we may be reaching peak infection and mortality rates in major cities," said Michael McCarthy, chief market strategist at CMC Markets. "But frankly that may be ill-founded."
The United States is bracing for its toughest week yet as the death toll climbs above 10,000 while across the Atlantic, British Prime Minister Boris Johnson has entered intensive care after his COVID-19 symptoms worsened.
Japan's Nikkei (N225) rose 2% and has erased most of last week's losses after Prime Minister Shinzo Abe promised a massive $991 billion economic stimulus package - equal to 20% of GDP.
MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) pared early gains, but rose 1.4%.
Oil rose on hopes the world's biggest producers will agree to cut output as the virus pandemic crushes demand, while the risk-sensitive Australian dollar
"The market is front running what it believes is a peak in the virus case count with Europe leading the way," said Chris Weston, head of research at Melbourne brokerage Pepperstone.
"You can almost smell the fear of missing out from active managers."
Worldwide, the virus has infected more than 1.3 million people and killed over 74,000, and the numbers are rising even as swathes of the globe are under lockdown.
Hope stems though from hardest-hit Italy and Spain, where authorities have started looking ahead to easing lockdowns after steady falls in coronavirus-related fatality rates.
In New York, the number of deaths each day has also steadied while hospitalisations, admissions to intensive care and the number of patients put on ventilators all declined.
Markets in Seoul (KS11), Shanghai (SSEC) and Hong Kong (HSI) opened higher, then pared gains. Australia's ASX 200 (AXJO) slipped into the red.
'PEAK DEATH WEEK'
Moves in the currency and bond markets were more muted, weighed by worries that lifting lockdowns too soon could drive a fresh wave of infections and caution about the economic fallout.
The U.S. dollar, which has soaked up safety flows for weeks, slipped on most majors.
The Australian dollar
"It's a long way short of a serious rally," said Sean Callow, an FX analyst at Westpac in Sydney. "There is still so much bad news to absorb from the economy."
The New Zealand dollar
The United States has reported skyrocketing unemployment as lockdowns drive layoffs and is bracing for what one official called the "peak death week".
Roughly twice as many people a day are now dying in the United States as in Spain or Italy, and hospitals report chaotic shortages of beds, ventilators and protective gear.
Benchmark 10-year U.S. Treasuries (US10YT=RR) recovered their overnight losses, with yields rising 31 basis points to 0.7090%, having fallen almost 9 basis points on Monday. [US/]
Oil recovered amid hopes major producers will agree to cut output at a meeting to be held by video conference at 1400 GMT.
Brent crude (LCOc1) was up $1.04, or 3.15%, at $34.09 a barrel after falling more than 3% on Monday. U.S. crude (CLc1) was up $1.00 to $27.07 per barrel. [O/R]
Gold