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By Geoffrey Smith

Investing.com — Europe’s stock markets opened higher on Tuesday, but with less vigor than U.S. markets showed on Monday, on hopes for coordinated policy action from governments and central banks to support the world economy.

Central banks from Japan to Europe followed the Federal Reserve on Monday in expressing their intention to ensure financial markets have enough liquidity and aren’t destabilized by panic-selling. However, fears remain that central bank action won’t be enough to stop the coronavirus hobbling the world economy.

Markets are likely to focus on the outcome of a teleconference call later Tuesday between G7 finance ministers and central bank governors to discuss the coronavirus and its implications. Reuters reported that there would be no announcement of concrete, coordinated stimulus measures to support the economy.

By 3:10 AM ET (0810 GMT), the benchmark was up 6.2 points or 1.7% at 382.30, while the German was up 1.5% and the U.K. was up 1.6%. In Italy, home to the worst outbreak of Covid-19 so far in Europe, the rose 1.7%.

While President Donald Trump again criticized the Federal Reserve for not cutting rates overnight, many others warn that rate cuts alone won’t stop the virus hitting the world economy. The Organization for Economic Cooperation and Development slashed its forecast for world growth this year to 2.4% on Monday, which would be the lowest since 2009.

“The virus holds particular risks for the world economy because it creates both a demand and supply shock to goods and services,” said Guy Monson, chief investment officer at Sarasin & Partners in e-mailed comments. “A demand shock alone can be mitigated by interest rate cuts and central bank support. However, if labor is quarantined, critical supplies become unavailable and public gatherings are restricted, the impact of rate cuts will be muted at best.”

There was little in the way of major corporate news to report. Of the few companies to issue updates, German consumer group Beiersdorf (DE:), the maker of Nivea, warned that it was impossible to estimate what impact the virus would have on business in 2020 and consequently didn’t factor it into a forecast for 3%-5% organic sales growth.

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