By Swati Pandey
SYDNEY, Nov 20 (Reuters) - World financial markets stalled on Friday as news U.S. Treasury was ending emergency loans programmes dealt a blow to economic recovery hopes just as California announced curfews to try and fight surging coronavirus infections.
S&P500 ESc1 futures slipped 0.5% while Dow futures 1YMc1 fell 0.6%, cancelling out a firmer lead from a strong Wall Street session overnight.
The dollar =USD was slightly weaker and the 10-year Treasury yield US10YT=RR slipped to the lowest in 10 days at 0.818%. futures started almost flat while London's FTSE futures FFIc1 was up 0.25%
In Asia, Japan's Nikkei .N225 stumbled 0.5% while Australian shares were flat. Chinese shares were little changed while South Korea's KOSPI index .KS11 was a shade firmer.
That left MSCI's broadest index of Asia-Pacific shares excluding Japan .MIAPJ0000PUS up 0.3%. It is up 1.5% so far this week.
In a letter to U.S. Federal Reserve Chair Jerome Powell, U.S. Treasury Secretary Steven Mnuchin said the $455 billion allocated to Treasury under the CARES Act should be instead available for Congress to reallocate. divide between the Treasury and the Fed risks undermining the unwavering faith that investors have placed on continuous policy support to help the economy weather the pandemic," Singapore-based DBS wrote in a note.
Although the programmes were not used extensively, Fed officials felt their presence reassured financial markets and investors that credit would remain available to help businesses, local agencies and even nonprofits through the pandemic downturn.
Mnuchin's decision added to market anxiety about broader economic growth as data shows the early fast recovery from a historic plunge in the U.S. economy is fading, with more than 10 million who had jobs in January still out of work.
"The Fed has been one of the only sources of stability in Washington and removing its latitude to offer support in a shaky recovery is simply nonsensical," said Isaac Boltansky, director of policy research at Washington-based Compass Point Research & Trading.
"This is a distressing development that injects uncertainty and instability into markets completely unnecessarily. How many times will Washington trip on its shoelaces in response to this crisis?"
Investor sentiment was also hit by data that showed COVID-19 hospitalisations across the United States jumped by nearly 50% in the last two weeks, threatening the recovery of the world's largest economy as cities and states began to impose lockdowns. on Thursday imposed a curfew on social gatherings and other non-essential activities in one of the most intrusive of the restrictions being ordered across the country to curb an alarming surge in infections. three major U.S. stock indexes, however, got a healthy boost overnight after Senate Democratic Minority Leader Chuck Schumer said Republican Majority Leader Mitch McConnell had agreed to revive talks to craft a new fiscal relief package. senior Democratic aide told Reuters there had been a mid-afternoon meeting on Thursday among congressional aides that discussed coronavirus relief and efforts to pass a $1.4 trillion bill to keep government agencies operating beyond Dec. 11 when current funding expires.
The Dow .DJI rose 0.15%, the S&P 500 .SPX gained 0.39% and the Nasdaq .IXIC added 0.87%.
In currencies, the dollar index =USD was last at 92.232, edging closer to Thursday's low of 92.236.
The euro was up at $1.1881 EUR= while the yen weakened to 103.8 per dollar JPY= . The Australian dollar gained to be up 0.2% at $0.7294 AUD=D4 .
In commodities, oil prices steadied after losses the previous day, when concerns about coronavirus lockdowns affecting fuel demand weighed on the market. O/R
West Texas Intermediate CLc1 was flat $41.74 a barrel. Brent crude LCOc1 was up 10 cents at $44.30.
Gold was flat with spot prices XAU= at 1,867.3 an ounce.
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