European, Asian stocks steady after virus sparks US collapse

London: European and Asian stock markets steadied Tuesday following Wall Street's sharpest daily drop in more than three decades, with analysts forecasting more volatility as governments and central banks scramble to try and calm the panic.

The dollar bounced back from heavy losses against the euro on Monday, while oil prices also recovered.

European stock markets surged around five percent in early deals Tuesday before either limiting or erasing all the gains.

"As has been the case every time the European markets have tried to rebound, it is not going to be smooth sailing," noted Connor Campbell, analyst at Spreadex trading group.

Wall Street indices collapsed Monday in their worst day since 1987, with the S&P 500 and Nasdaq dropping about 12 percent and the Dow sinking nearly 13 percent. US futures rallied Tuesday.

In a move meant to help tame the massive volatility in the markets caused by the coronavirus outbreak, the French bourse regulator on Tuesday banned short-selling in 92 stocks for the day.

"Taking into account the significant losses in recent days on the financial markets, the Financial Markets Authority (AMF) has decided to take an urgent step," it said in a statement.

The ban order covers mostly bank and financial stocks.

Investors use short-selling to bet the market will fall, putting tremendous downward pressure on prices at a time when buying interest is virtually non-existent.

While governments and central banks attempt to soothe markets with massive stimulus pledges and interest rate cuts, more countries are going into lockdown to prevent the outbreak's spread -- bringing the world economy juddering to a halt.

There is a broad consensus that the disease, which has wiped trillions off market valuations, will cause a global recession, with the airline industry among the first in the firing line, leading company heads to plead for billions of dollars in state help to prevent them going under.

The Italian government Tuesday said it intends to re-nationalise the bankrupt former national carrier Alitalia under an emergency economic rescue.

"Drastic measures by the Federal Reserve and other central banks have failed to appease markets, with investors still running towards the exit door of risk assets as governments step up their radical measures to contain the COVID-19 outbreak," said National Australia Bank's Rodrigo Catril.

The Philippines became the first country to shut down its stock market as the country goes into lockdown, and the bourse will be closed until further notice.

Sydney's stock market closed up 5.8 percent Tuesday, a day after crashing 9.7 percent in its worst day on record.

But after an early advance, the rest of Asia swung in and out of positive territory through the day.

Tokyo ended up 0.1 percent after a roller-coaster session, Hong Kong added 0.9 percent and Mumbai rose 0.7 percent, while Bangkok was slightly higher.

But Shanghai slipped 0.3 percent, while Jakarta sank more than four percent. Seoul, Taipei and Singapore were all down.

Wellington dipped despite New Zealand becoming the latest country to announce monetary support, unveiling a US 7.3 billion package of measures.

That was followed later Tuesday by a 45 billion euro (50 billion) aid pledge by France for its businesses.