GLOBAL MARKETS-Jump in coronavirus cases halts stock rally; dollar gains

(Adds U.S. market open, byline, dateline)

* Hubei province reports 14,840 new cases

* 10-year Treasury yields drop below 1.6%, European yields dip

* Euro struggles after slumping to near 3-year low

* World FX rates in 2020

NEW YORK/LONDON, Feb 13 (Reuters) - The dollar rose and global equity markets slumped on Thursday after a new methodology that sharply increased the death toll in China from the coronavirus unnerved investors and halted a rally that had lifted U.S. and European stocks to record peaks.

Chinese officials said 242 people died in Hubei province on Wednesday, the biggest daily rise since the virus emerged in the provincial capital of Wuhan in December.

Hubei had previously only allowed infections to be confirmed by RNA tests, which can take days, and began using computerised tomography (CT) scans to identify and isolate cases faster. The move effectively lowered the bar for classifying new infections.

As a result, 14,840 new cases were reported in the province on Thursday, up from 2,015 new cases nationwide a day earlier.

Investors sought safety in U.S. assets, pushing the yield on the 10-year U.S. Treasury note lower as the euro plunged to more than two-year lows against the dollar. The euro also fell to a four-and-a-half-year low against the Swiss franc.

The United States is expected to weather the economic impact of the virus better than the euro zone.

AXA Investment Manager’s chief economist Gilles Moec said the impact of the virus could be part of a “perfect storm” for Europe that hurts the economy for months before it gets compounded by a heated trade battle with the United States.

“We started with the premise that this virus would be worse than SARS and that has now become consensus,” Moec said.

“So attention turns to who is hit the hardest and Europe is among the usual suspects and Germany in particular, given China is its biggest export market. So the reaction of the exchange rate is probably rational,” he added.

The dollar index was flat, with the euro down 0.23% to $1.0846.

Europe’s main markets followed Asia into red, while stocks on Wall Street traded slightly lower to little changed.

MSCI’s gauge of stocks across the globe shed 0.16% and its emerging markets index lost 0.22%.

The pan-European STOXX 600 index lost 0.02%.

On Wall Street, the Dow Jones Industrial Average fell 68.43 points, or 0.23%, to 29,482.99. The S&P 500 lost 0.89 points, or 0.03%, to 3,378.56 and the Nasdaq Composite added 2.40 points, or 0.02%, to 9,728.37.

While the jump in reported coronavirus cases was unsettling, markets in Asia took the news in stride.

MSCI’s broadest index of Asia-Pacific shares outside Japan snapped two days of 1% gains to close 0.1% lower as most markets across the region posted modest declines.

“There is no panic on this,” said Frank Benzimra, head of Asia equity strategy at Societe Generale in Hong Kong, since the dramatic rise seems so far to be contained to Hubei.

Oil prices rose, shrugging off bearish reports which cut back demand forecasts for this year on the back of the coronavirus outbreak in China, the world’s biggest oil importer.

Paring losses from earlier in the session, Brent crude rose 44 cents to $56.23 a barrel, while U.S. West Texas Intermediate (WTI) added 24 cents at $51.41 a barrel.

Benchmark 10-year notes last rose 3/32 in price to yield 1.6173%.

There was drama for Brexit-bound British markets.

The sudden resignation of the British finance minister Sajid Javid caused a jump in both sterling and British government bond yields amid bets his replacement, the 39 year-old Rishi Sunak, will beef up spending.

Javid’s departure, coming less than a month before he was due to deliver his first budget and after just 204 days on the job, made him the shortest-serving chancellor of the exchequer since 1970.

“I suspect he (Sunak) is likely to do whatever Boris Johnson tells him to do,” said Nomura economist George Buckley. “I don’t know what that means for the public finances and fiscal policy but I doubt it will mean tighter fiscal policy.”

Reporting by Herbert Lash; Editing by Bernadette Baum