GLOBAL MARKETS-Global shares extend rebound on policy easing hopes, eye G7 for cues

* Hopes of central bank stimulus lift global shares

* ECB says stands ready to take targeted measures

* G7 conference call planned later on Tuesday

* Australia central bank cuts policy interest rate

By Hideyuki Sano

TOKYO, March 3 (Reuters) - Global shares and oil prices extended their rebound on Tuesday as policymakers indicated their willingness to move to ease the economic fallout from the coronavirus, while investors waited for a conference call by Group of Seven heads for trading cues.

Finance ministers from the G7 group and central bank governors will hold a conference call on Tuesday (1200GMT) to discuss measures to deal with the widening coronavirus outbreak and its economic impact..

The plan came after the European Central Bank (ECB) on Monday joined the chorus of central banks signalling a readiness to deal with the growing threats from the outbreak.

"Policymakers globally are talking about supporting the economy. So short-term players, including myself, are closing positions for now ahead of the G7 call," said Masaru Ishibashi, joint general manager of trading at Sumitomo Mitsui Bank.

Earlier messages from the U.S. Federal Reserve (Fed) that it was prepared to act weighed on the greenback.

The improved mood supported U.S. S&P 500 futures, which rose as much as 1.0% in Asian trade. But the index pared gains after Reuters reported that the G7 draft statement on coronavirus response does not specifically call for new government spending or coordinated rate cuts.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.4%.

Japan's Nikkei lost steam and fell 0.7% after short-covering ran its course and as the yen firmed on the dollar.

The rout in global stocks last week had already prompted Fed Chair Jerome Powell and Bank of Japan Governor Haruhiko Kuroda to flag a readiness to move.

Money markets are fully pricing in a cut of at least 0.25 percentage point to the current 1.50%-1.75% target rate at the Fed's March 17-18 meeting as well as a 0.10 percentage point cut to the ECB's key rate at March 12 meeting.

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The frantic moves by policymakers reflected growing fears that the disruption to supply chains, factory output and global travel caused by the new epidemic could deal a serious blow to a world economy trying to recover from the U.S.-China trade war.

The Organisation for Economic Cooperation and Development has cut its forecast of global economic growth this year to 2.4%, the lowest since 2009 and down from a forecast of 2.9% in November.

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Coronavirus is now spreading much more rapidly outside China than within the country, leading the world into uncharted territory, although the World Health Organization (WHO) has so far stopped short of calling it a pandemic.

In the United States, six people in the Seattle area have died of the illness caused by the coronavirus, as authorities across the country scrambled to prepare for more infections.

"It would be myopic to think that (economic) policy actions alone will bring back calmness to markets. The reality is, the coronavirus is still spreading," said Takehiko Masuzawa, head of sales trading for Japanese clients at Macquarie in Tokyo.

FED RATE CUTS

The rebound in global stock prices saw U.S. bond yields roll back some of their sharp falls.

The 10-year U.S. Treasuries yield retreated to 1.116% from a record low of 1.030% marked on Monday. The rate-sensitive two-year notes yield jumped back to 0.844% from Monday's 3 1/2-year low of 0.710%.

Still, the 10-year and two-year yields are down more than 40 and 50 basis points, respectively, from about two weeks ago.

April Fed funds rate futures still price in about 80% chance of a 0.50 percentage point cut this month and a total of almost 1 percentage point cuts by the end of year.

Expectations of Fed rate cuts prompted investors to cut their exposure to the dollar.

Against the yen, the dollar lost 0.5% to 107.73 yen, slipping towards a five-month low of 107 set on Monday.

The euro firmed to $1.1148, having hit an eight-week peak of $1.1185 in the previous session.

The Australian dollar erased earlier losses to trade at $0.6545, more than a cent above an 11-year low of $0.64345 set on Friday, after Australia's central bank cut the policy interest rate to 0.5% from 0.75% as expected.

Oil prices bounced back further after a jump of more than 4% on Monday, reversing an early decline to multi-year lows.

Hopes of a deeper output cut by the Organization of the Petroleum Exporting Countries and central banks' policy measures countered worries about the impact of the virus on demand.

U.S. West Texas Intermediate crude futures rose 2.4% to $47.85 a barrel, up sharply from Monday's low of $43.32 a barrel, which was the lowest since December 2018.

While the coronavirus continues to dominate investor attention, focus has also swung to Super Tuesday in the United States, the biggest day in the Democratic primary elections to choose a challenger to President Donald . (Reporting by Hideyuki Sano; Editing by Sam Holmes and Himani Sarkar)

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