LONDON - Stock markets sank on Friday, erasing meagre gains for the week, as more companies flagged a hit to business from the coronavirus pandemic while oil prices extended their previous day's gains on hopes of a global supply cut.

With virus-fighting lockdowns raising the risk of a prolonged global downturn, investors continued to seek the safety of the US dollar and government bonds, pushing US Treasury yields near their lowest in three weeks.

With over a million people infected worldwide, there were more signs the pandemic would take a massive toll on economic growth. Morgan Stanley said the US economy will shrink 5.5 percent in 2020, the steepest drop since 1946, with a huge 38 percent contraction predicted for the second quarter.

Wall Street’s main indexes opened lower on Friday as the novel coronavirus brought the longest US employment expansion on record to an abrupt end.

The Dow Jones Industrial Average fell 127.51 points, or 0.60%, at the open to 21,285.93. The S&P 500 opened lower by 11.98 points, or 0.47%, at 2,514.92. The Nasdaq Composite dropped 10.04 points, or 0.13%, to 7,477.27 at the opening bell.

The pan-European STOXX 600 index was down 0.4 percent by 0749 GMT, taking MSCI'S All Country World Index down 0.3 percent.

MSCI's Asia-Pacific index outside Japan dipped 0.6 percent while Japan's Nikkei erased earlier gains to end flat.

Brent crude futures gained 3.64 percent to US$31.03, extending Thursday's record 24.7 percent surge , while US West Texas Intermediate (WTI) crude fell 0.83 percent to US$25.11.

Trump said on Thursday he had spoken to Saudi Crown Prince Mohammed bin Salman, and expects Riyadh and Moscow to cut oil output by as much as 10 million to 15 million barrels, as the two countries signalled willingness to make a deal.

Saudi Arabia said it would call an emergency meeting of the Organization of the Petroleum Exporting Countries, state media reported.

The amount cited by Trump would represent an unprecedented cut equal to 10 percent to 15 percent of global supply, in output per day terms, a common unit of measurement.

However, Trump provided few details, an omission some analysts said was likely intentional, and which they said explained a pullback in prices in the Asian session.

"The reason the price came back down is that these figures are so unbelievable as to make one wonder whether the person saying them understood what he was talking about," said Marshall Gittler, head of investment research at BDSwiss Group.

In early March, talks over production cuts between the two countries collapsed, leading them to start a price war that pushed oil prices to the lowest levels in nearly two decades.

Safe assets in demand

Investors sought the safety of government bonds. Benchmark US 10-year notes last yielded 0.597 percent, near a three-week low of 0.563 percent touched on Thursday.

More evidence of the damage from widespread stay-at-home orders to contain the spread of coronavirus emerged in the United States, with an unprecedented number of workers - 6.6 million - filing jobless claims.

Projections released by the US Congressional Budget Office showed gross domestic product would decline by more than 7 percent in the second quarter as the health crisis takes hold.

The pandemic has claimed more than 52,000 deaths as it further exploded in the United States and the death toll climbed in Spain and Italy, according to a Reuters tally.

Highly rated US corporate bond issuers raised a record US$110.502 billion this week, according to Refinitiv IFR data, as firms borrowed cash in fear the coronavirus crisis may soon limit their access to capital markets.

In the currency market, the dollar maintained its firmness against a basket of currencies as investors and companies continued to hoard the world's most liquid currency.

The dollar index has risen 1.97 percent so far this week, even as extreme tightness for greenback since last month eased.

The euro dipped 0.5 percent to US$1.0798 set for five straight days of losses, and at its lowest level since March 25. The yen also stepped back to 108.11 per dollar from Wednesday's two-week high of 106.925.

Gold prices extended the previous day's gains on the dire US jobless claims figures, intensifying fears of the coming economic slowdown and driving investors toward the safe-haven metal.

Spot gold rose 0.1 percent to US$1,613.78 per ounce after a 1.28 percent rise on Thursday.