By Herbert Lash
NEW YORK (Reuters) - Gold rose and the dollar hit a four-month high against the euro on Monday on safe-haven appeal as the death toll from the coronavirus outbreak passed that of the SARS epidemic two decades ago, but Wall Street rallied to record highs.
Worries about the coronavirus kept investors on edge, as the World Health Organization warned transmission of the deadly virus among people who have not visited China could be "the spark that becomes a bigger fire."
Deal talks and a rally in defensive sectors helped the broad pan-European STOXX 600 index <.STOXX> close up 0.07%, while Wall Street rebounded on the outlook for earnings and the economy, spurring the Nasdaq and S&P 500 to record closing highs.
Weak economic data in the eurozone made the dollar relatively more attractive than the single currency, especially considering Friday's U.S. non-farm payrolls report showing an acceleration in job growth in January.
Data on Monday revealed Italian industrial output was much weaker than expected in December, another setback for the euro after data on Friday showed German industrial output suffered its biggest fall since recession-hit 2009.
A gauge of global equity markets rose, lifted by U.S. stocks after Wall Street rebounded, while key indexes for London <.FTSE>, Paris <.FCHI> and Frankfurt <.GDAXI> declined, weighed down on concerns about the extent of the coronavirus.
"We have the safe-haven bid from the coronavirus. That is killing EM and really benefiting the dollar, and to a lesser extent the yen and Swiss," said Win Thin, global head of currency strategy at Brown Brothers Harriman in New York.
MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 0.24%, and emerging market stocks lost 0.46%. In Europe, automakers <.SXAP>, among the most exposed to China, fell 0.8%.
On Wall Street, the Dow Jones Industrial Average <.DJI> rose 174.31 points, or 0.6%, to 29,276.82. The S&P 500 <.SPX> gained 24.38 points, or 0.73%, to 3,352.09 and the Nasdaq Composite <.IXIC> jumped 107.88 points, or 1.13%, to 9,628.39.
"We know the coronavirus will affect results at least in first quarter," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "(But) we'll be back to growth as usual for the rest of the year."
Investors continued to monitor the advance of the virus, which had killed more than 900 people as of Sunday, mostly in China's provincial capital of Wuhan, the epicenter of the outbreak.
The full economic impact of the virus is still unknown but is expected to exacerbate a slowdown in the Chinese economy. Electric carmaker Tesla Inc <TSLA.O> rose 3.1%, however, as its Shanghai factory returned to service.
The dollar index <.DXY> rose 0.17%, with the euro <EUR=> down 0.28% to $1.0912. The Japanese yen <JPY=> strengthened 0.03% versus the greenback at 109.75 per dollar.
Bond yields fell. The benchmark 10-year U.S. Treasury note<US10YT=RR> rose 4/32 in price to yield 1.5628%.
Treasury debt, which serves as a safe-haven investment in times of geopolitical and economic volatility, has been in demand since the start of the year. The 10-year Treasury yield <US10YT=RR>, which moves inversely to price, has fallen 17.8% since Dec. 31.
The yield on Germany's benchmark 10-year bund <DE10YT=RR> fell to -0.443%, inching towards 3-1/2 month lows at -0.447% set last week.
Shares overnight in Asia mostly fell. Japan's Nikkei <.N225> was off 0.6%, South Korea's KOSPI <.KS11> was 0.5% weaker while Australia's benchmark index <.AXJO> eased 0.14%.
China's indexes were the only ones in the black in Asia, with the blue-chip index <.CSI300> adding 0.4% and Shanghai's SSE Composite <.SSEC> up 0.5%.
Oil prices dipped on weaker Chinese demand due to the coronavirus and as traders waited to see if Russia would join other producers in seeking further output cuts.
Oil has dropped more than 20% from a peak in January after the spreading virus hit demand in the world's largest oil importer and fueled concerns of excess supplies.
Brent crude <LCOc1> slipped $1.20 to settle at $53.27 a barrel, while U.S. West Texas Intermediate <CLc1> fell 75 cents to settle down at $49.57 a barrel.
U.S. gold futures <GCcv1> settled 0.4% higher at$1,579.50 an ounce.
Graphic: Stocks stabilize as pace of reported virus infections slows, https://fingfx.thomsonreuters.com/gfx/mkt/13/1874/1843/MicrosoftTeams-image%20(2).png
(Reporting by Herbert Lash, additional reporting by Stephen Culp and Karen Brettell in New York; Editing by Dan Grebler, Tom Brown and Sonya Hepinstall)