* A look at the day ahead from EMEA markets editor Mike Dolan. The views expressed are his own.
LONDON, Jan 28 (Reuters) - After the biggest one-day loss on world stock markets since October on fears over the economic impact of the coronavirus outbreak in China, the selling appeared to have abated on Tuesday. European stocks gained about 0.5% at the open, U.S. stock futures were up about the same amount, and although Chinese markets remain closed all week, the 0.5% overnight drop in Tokyo’s Nikkei was modest compared with Monday's decline. Many of the Asian markets that were open rallied from the day’s lows. Brent crude oil prices stabilised above $59 a barrel, above Monday’s three-month low of $58.50. Ten-year U.S. Treasury yields stabilised above 1.60% after dipping below that on Monday. Japan’s yen retreated, allowing dollar/yen to climb back to 109. China’s offshore yuan strengthened from Monday’s three-week low and gold prices ebbed. MSCI’s all-country index, which saw some $840 billion wiped off its market capitalization on Monday, was down less than 0.1% on Tuesday.
The death toll from the virus rose above 100 in China, but no deaths have been recorded outside the country. The head of the World Health Organisation said on Tuesday he was confident China could contain the virus and did not advocate the evacuation of foreign nationals. The market shakeout on Monday was a mix of uncertainty concerns about the course of the outbreak and worries about the economic disruption from travel restrictions as part of containment policies. Cuts to first-quarter Chinese growth forecasts and the knock-on impact on the world economy was in the frame, even if it’s likely this lost activity would be recovered later in the year. The economic worries were seen in the flattening of the U.S. Treasury yield curve, where the gap between three-month and 10-year yields a bellwether of future growth - fell below 3 basis points at one point overnight and was at its lowest since October. It recovered early on Tuesday.
Attention will now return to this week’s U.S. Federal Reserve meeting and fourth-quarter corporate earnings. Apple reports its results later on Tuesday. Elsewhere, sterling weakened against the dollar before Thursday’s Bank of England meeting. Markets foresee a 50-50 chance of a rate cut and will also keep a close eye today on the expected UK decision to allow Chinese telecom giant Huawei to remain part of its 5G plans, against Washington’s warnings.
In European corporate news, stocks Swatch and Richemont saw some relief after December Swiss watch exports data showed 5.8% year-on-year growth. Apple component suppliers STMicro, Dialog and others were in the spotlight after a Nikkei report said the coronavirus outbreak may disrupt iPhone production plans. In the UK, Tullow Oil was up 1% after the company's top shareholder raised his stake to 9.7% from 7.1%. SAP's shares fell 2% in early trade after the German software provider's in-line fail to impress investors.
* Europe corp events: LVMH, Bankia, Atlas Copco, Kone, SAP, SGS, Swedbank, Philips, Sartorius. Trading statements from Virgin Money, UDG Healthcare, Euromoney
* Swiss Dec trade balance
* UK sells 2029 gilts
* UK Jan CBI distributive trades survey
* UK set to decide on 5G role for Huawei
* European Central Bank supervisor Enria presents annual evaluation of euro zone banks; ECB chief economist Lane speaks in Brussels, Bank of Spain chief Hernandez de Cos in Madrid
* German finance minister Scholz speaks in Berlin
* Sweden Dec trade balance, retail sales and PPI inflation
* Hungary central bank policy decision
* Russia Dec jobless, retail sales, Nov wages
* US Q4 earnings: Apple, eBay, Starbucks, Lockheed Martin, Pfizer, 3m, United Technologies, Wynn Resorts, Harley Davidson, TRowe Price, Franklin Resources, AMD etc
* US Jan consumer confidence, Dec durable goods orders, Nov house prices
* Mexico Dec trade balance
* US Treasury sells 7 year notes, 2-year FRNs (Editing by Larry King)