(Adds oil, gold settlement prices, comment)
* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh
* U.S., European shares tumble on growth prospects
* Crude oil prices collapse in 10% plunge
* Gold prices post biggest weekly gain in eight years
* U.S. two-year, 10-year Treasuries hit record lows
* Dollar dips against yen, Swiss franc
By Herbert Lash
NEW YORK, March 6 (Reuters) – Yields on U.S. Treasuries plunged to historic lows on Friday as fear the coronavirus outbreak will slam the global economy drove investors to snap up risk-adverse assets and dump equities, overshadowing data highlighting a strong U.S. labor market.
The 10-year Treasury yield fell to a record low of 0.69% as new milestones were set across the U.S. bond market, which this week has seen some of its biggest moves in years as the pandemic rapidly spreads outside China.
Gold prices rose more than 1% at one point and posted their biggest weekly gain since October 2011, while declining U.S. government bond yields weakened the dollar and pushed it toward its worst week since 2016, down more than 2%.
The number of people infected with the new coronavirus across the world surpassed 100,000 on Friday as its economic toll intensified, with business districts beginning to empty and companies bracing for slower sales.
A U.S. jobs report showed employers maintained a robust pace of hiring in February, driving solid wage growth and the unemployment rate to fall back to near a 50-year low of 3.5%.
Upward revisions also were made to hiring in December and January but this month’s report failed to fully capture the impact of the coronavirus, which led the Federal Reserve to cut interest rate by a half percentage point earlier this week.
“If you have a really strong jobs report and there’s no one around to hear it, does it make a noise?” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
“Today’s an example that it doesn’t. There are many other things that investors are focused on besides the jobs report this morning,” he said.
Since the end of January when the coronavirus started to make headlines worldwide, markets have sold off on Fridays as investors are unwilling to go into the weekend holding too many risky positions, Arone said.
“That pattern has held true and we’re observing it in today’s market as well,” he said.
The flu-like virus emerged late last year in central China and has spread to more than 80 countries, killing more than 3,000 people. Travel restrictions and factory closings aimed at curbing the virus are expected to pressure global growth, but the extent of a slowdown is hard to calculate, analysts say.
Stock prices clearly have been impacted but how much and for how long earnings will be affected is unknown, said Katie Nixon, chief investment officer at Northern Trust Wealth Management in Chicago.
“We just don’t know the magnitude of the duration,” she said. Supply issues already are being resolved in China, but “the demand picture is a lot murkier as people are very rapidly changing their behavior around the world,” she said.
“Social distancing is the new black. Everyone’s doing it.”
IHS Markit cut its U.S. growth forecast for the year to 1.8% from a previous 2.1% because of the pandemic. “We are not forecasting a recession, but the risks have risen,” it said.
MSCI’s gauge of stocks across the globe shed 3.10% and emerging market stocks lost 2.81%.
In Europe, the pan-regional STOXX 600 index fell 3.67%. The travel & leisure sub-index slid 3.9% to trade firmly in bear market territory, seen as a 20% drop from recent peak.
Rate-sensitive U.S. financial stocks nursed some of the biggest losses among the 11 S&P sectors on Wall Street. The banking sub-index fell 3.3%.
The Dow Jones Industrial Average fell 753.9 points, or 2.89%, to 25,367.38. The S&P 500 lost 107.67 points, or 3.56%, to 2,916.27 and the Nasdaq Composite dropped 320.67 points, or 3.67%, to 8,417.93.
Money markets are pricing in another 25 basis-point cut at the Fed meeting on March 18-19, and a 50 basis-point cut by April. Minneapolis Federal Reserve President Neel Kashkari said Thursday the Fed could cut rates further if needed.
Gold prices rose about 6.3% so far for the week but fell after initial gains. Spot gold added 0.9% to $1,684.76 an ounce.
Treasury prices soared but the strong U.S. non-farm payrolls report lifted the yield a bit from their lows.
Benchmark 10-year notes rose 68/32 in price to yield 0.7088%, while the 30-year bond rose 303/32 in price to yield 1.2131%.
Germany’s benchmark 10-year Bund yield fell to a six-month low of -0.739%, close to record lows hit last September during jitters over the Sino-U.S. trade war.
Oil prices tanked about 10% to their lowest levels since mid-2017 after Reuters reported that Russia balked at the Organization of the Petroleum Exporting Countries proposed steep production cuts to stabilize prices.
Brent futures settled down $4.72 at $45.27 a barrel, while U.S. West Texas Intermediate (WTI) crude shred $4.62 a barrel to settle at $41.28 a barrel.
Gold rose to its highest since January 2013 at $1,689.65 an ounce earlier in the session but later pared some gains.
U.S. gold futures settled 0.3% higher at $1,672.40.
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