* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh
* Coronavirus death toll in China rises to 361
* China c.bank injects $174 bln of liquidity on Monday
* Economists lower growth forecasts for Chinese economy
* European shares rise on Brexit relief
By Ritvik Carvalho
LONDON, Feb 3 (Reuters) - World shares sank to their lowest in seven weeks on Monday, dragged down by a plunge in Asian stocks on their first trading day after a long break on fears the coronavirus epidemic would hit demand in China.
Aiming to head off any panic, the Chinese government took steps to shore up an economy hit by travel curbs and business shut-downs because of the virus.
Despite the support, Chinese shares were deep in the red, with the blue-chip index stumbling 7.8% to a 4-1/2 month trough. The benchmark Shanghai Composite index lost $420 billion of its value while the yuan opened at its weakest level in 2020, sliding past the symbolic 7-per-dollar level.
MSCI's All Country World Index, which tracks shares in 47 countries, was down 0.2% on the day, and at its lowest since Dec. 16.
European shares bucked the broader trend however, opening a tad higher as investors were relieved that the UK had finally exited the EU, although ongoing fears over the virus dampened enthusiasm.
The pan-European STOXX 600 index was 0.2% higher in early deals in London. Blue-chip British stocks added 0.4%.
While China's losses were heavy, they were mostly a product of selling pressure that had built up over the Lunar New Year break, not a reflection of new market fears. In contrast, futures for U.S. and European shares inched up, oil pared early losses while safe havens Japanese yen and gold stepped back from recent highs.
"The market seems to have reacted quite reasonably," said Pala Asset Management portfolio manager David Nietlispach.
"There is no panic and no selloff of securities that are unrelated to the coronavirus. The government interventions have been so heavy though that you will see an impact on the global economy."
E-Mini futures for the S&P500 jumped 0.6% during European hours on Monday pointing to a positive start for Wall Street after a rout last week.
Yet, Asian markets, more broadly, remained in a sell-off mode with MSCI's broadest index of Asia-Pacific shares outside Japan down for an eighth straight day to be off 0.9% at 527.39 points, its lowest since early December.
Japan's Nikkei dived 1% to the lowest since November and Australia's benchmark index ended 1.3% lower.
"The impact in Chinese equity markets have been in line with what futures were suggesting so the market has taken the slump in its stride," said Rodrigo Catril, Sydney-based strategist at National Australia Bank. "There was also some cushion from the new measures."
A total of 361 people have died in China from the coronavirus, with the first death outside the mainland reported on Sunday in the Philippines.
In a bid to soften the blow on China's economy, the country's central bank cut reverse repo rates by 10 basis points and injected 1.2 trillion yuan ($173.8 billion) of liquidity into the markets on Monday.
Beijing also said it would help firms that produce vital goods resume work as soon as possible, state broadcaster CCTV reported.
Still, a raft of global economists, including Citigroup, Nomura and JPMorgan, downgraded their forecasts for China's GDP growth.
"By extension, this will likely have an impact on global growth, too, given China's large contribution to global growth," Nomura said.
That means equity markets, especially in Asia, will likely remain under pressure as the number of infections is expected to increase in the weeks ahead.
"Until the rate of new cases peaks, equities are in limbo – too late to sell, too early to buy," said Sean Darby, Hong Kong-based strategist at Jefferies.
As Chinese markets opened after the 10-day break, Shanghai copper hit its daily selling limit as did Shanghai crude oil while yields on the country's 30-year government bonds traded in the interbank market were down 18.5 basis points.
Dalian soymeal plunged 4.1% while Dalian iron ore hit limit down with steel prices tumbling too.
In currencies, the safe-haven Japanese yen eased a tad but was still near a 3-1/2-week high against the dollar at 108.61. The euro was 0.2% lower at $1.1067 and the pound slipped 0.6% to $1.3122.
That left the dollar index, which measures the greenback against a basket of major currencies, a shade higher at 97.479.
Gold, which posted its best month in five in January, slipped 1% to $1,574.5 an ounce, while yields on U.S. debt came off lows.
Oil futures too pared early losses after skidding sharply earlier in the session on concerns the coronavirus outbreak would hit China's oil demand.
Brent crude was last down 0.6% at $56.27 a barrel after falling more than $1 at one stage. U.S. crude fell 0.1% to $51.51. (Reporting by Ritvik Carvalho; additional reporting by Marc Jones in London and Swati Pandey in Sydney; Editing by Giles Elgood)