MORNING BID EUROPE-'V'-shaped bounce turns more like 'W' as virus spreads

* A look at the day ahead from EMEA Markets Editor Mike Dolan. The views expressed are his own

LONDON, Feb 24 (Reuters) - As the coronavirus spreads beyond China, world markets are being forced to rethink the economic impact of the outbreak and how quickly it can be contained. New infections have ebbed in China, as many investors had assumed, but rose in South Korea, Italy and Iran, leading to lockdowns and travel restrictions in all three countries. The prospect of more economic damage from the added disruptions in these countries, the concern that the hiatus in economic activity will extend into the second quarter of the year and the uncertainty over where it may spread next has seen a relapse of world equity prices that had initially staged such an impressive V-shaped recovery earlier this month.

South Korea’s Kospi was worst hit first thing Monday, dropping almost 4%, as the country’s fourth-largest city Daegu grew increasingly isolated when the number of infections there increased rapidly. Hong Kong’s Hang Seng fell 1.6% and Australia’s benchmark fell more than 2%. South Korea’s won slid to its lowest since August. Shanghai and Tokyo losses were more limited. Excluding central Hubei province, the epicentre of the outbreak, mainland China reported 11 new cases, the lowest number since the national health authority started publishing nationwide figures on Jan. 20. China's offshore yuan was steady. The story was more worrying in Italy, where Milan’s market fell almost 4% at the open. Euro stocks more broadly were off about 2.7%. Italy sealed off the worst-affected towns and banned public gatherings in much of the north of the country, including halting the carnival in Venice, which reported two cases. Bank of Italy Governor Ignazio Visco was reported as saying that virus damage could cut growth more than 0.2% in Italy's already struggling economy. Italian 10-year sovereign bond yields jumped 8 basis points to their highest in over two weeks.

The euro, which bounced on Friday after unexpectedly upbeat euro zone February business surveys, fell back toward $1.08. Gold soared to its highest in seven years and Brent crude oil prices slipped back below $57. U.S. stock futures were pointing to losses of 1.5%. Ten-year Treasury yields slid to their lowest since July 2016 and the yield curve between three months and 10 years inverted by 14 basis points. Thirty-year yields fell to a record low of 1.87% as futures markets priced in one chance in the Federal Reserve would cut interest rates. U.S. markets were also hit by a victory for left-wing presidential candidate Bernie Sanders in the Democratic primary in Nevada over the weekend, as speculation grew he now had the momentum to win the nomination and go head to head with Donald Trump in November. The dollar was generally stronger, however, with the euro weakening and the yen stabilizing after last week’s sharp losses.

In European corporate news, worries over a global pandemic are likely to weaken travel, luxury and chip stocks. Shares in all three fell 2% to 3% at the open. RBC estimated a 3% to 4% earnings hit from the virus for Paris and Frankfurt airport operators. In the UK, AB Foods warned supply shortages were possible for some lines if production delays in China were prolonged. In banks, UniCredit confirmed CEO Jean Pierre Mustier would remain at the bank after reports that he was being considered for the top job at rival HBSC. The FT reported that Barclays would start to search for a new boss to replace CEO Jes Staley. Bunzl posted higher profit as acquisitions paid off; UK's Countrywide was in talks with LSL Property for a possible all-share merger.

* U.S. President Trump visits India, Mon/Tues

* Europe corp events: Bunzl, Bank of Ireland; trading statement from Associated British Foods

* Turkey Feb manufacturing confidence, Jan tourism

* Germany Feb Ifo business survey

* Bank of England Chief Economist Haldane speaks in London

* Israel central bank policy decision

* Cleveland Fed chief Mester speaks in DC

(Editing by Larry King)