GLOBAL MARKETS-Stocks, oil fall as China protests raise concerns over COVID management

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GLOBAL MARKETS-Stocks, oil fall as China protests raise concerns over COVID management

SYDNEY Reuters - Stocks and oil weakened on Monday as rare protests in major Chinese cities against the country's zero-COVID policy raised concerns about management of the virus in the world's second-largest economy.

The broadest index of Asia-Pacific shares outside Japan was down 0.6%, after U.S. stocks ended the previous session with mild losses.

Australian shares lost 0.47%, while Japan's stock index was down 0.37%.

South Korea's KOSPI 200 index fell by 1.35% in early trade, while New Zealand's S&P NZX 50 Index was off 0.4%.

On Sunday night, demonstrators and police clashed in Shanghai as protests over the country's stringent COVID restrictions flared for a third day.

There were also protests in Wuhan, Chengdu and parts of the capital, Beijing late Sunday as COVID restrictions were put in place in an effort to fight new outbreaks.

The dollar increased by 0.74% against the offshore yuan, and shifts to the open of China's markets later in the Asian morning.

The economic hit for China will be greater than expected because of the COVID rules and resulting protests.

A growing list of cities, including those with large populations, have imposed strong restrictions on movement because of a surge in infections, and there will be a negative impact on economic activity, according to CBA analysts on Monday.

Even if China is on a path to move away from its zero-COVID approach, the low level of vaccination among the elderly means that the exit is likely to be slow and possibly disorderly. The economic impacts are unlikely to be small. China has hit record highs in case numbers, with nearly 40,000 new infections on Saturday.

Commodity trade in Asia was affected by fears of Chinese economic growth.

S&P 500 and Nasdaq futures both fell, pointing to possible declines in Wall Street later in the day.

U.S. crude fell by 0.25% to $76.08 a barrel. Brent crude fell by 0.16 to $83.48 per barrel.

Both benchmarks slid to 10 month lows last week and declined for a third consecutive week.

Mobility data in China is showing the impact of a resurgence in COVID 19 cases, ANZ analysts wrote in a research note Monday. This is a negative backdrop for oil prices, because of weakness in the U.S. dollar. Yields on the benchmark 10 year Treasury notes went up to 3.6905% from its U.S. close of 3.702% on Friday. The two-year yield, which tracks traders' expectations of Fed fund rates, rose to 4.467%, compared to a U.S. close of 4.479%.

The dollar was up 0.22% against the yen to 139.4. It is well off its high this year of 151.94 on October 21.

The euro was down 0.2% on the day at $1.0371, having gained 4.94% in a month, while the dollar index, which tracks the dollar against a basket of currencies, was up to 106.3.

In Washington on Wednesday, Federal Reserve Chair Jerome Powell spoke to the Brookings Institute on the economic outlook and the labour market in the United States, which will be closely watched by investors.