Global equity markets seesawed in volatile trade and gold prices rose more than 2% on Tuesday after the Federal Reserve cut interest rates in an emergency move to shield the U.S. economy from the impact of the coronavirus.

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The U.S. central bank said it was cutting rates by a half percentage point to a target range of 1.00% to 1.25% as the "coronavirus poses evolving risks to economic activity."

The decision to cut rates before the Fed's next scheduled policy meeting on March 17-18 reflects the urgency with which policymakers felt they needed to act to prevent a potential global recession. The decision was unanimous, it said in a statement.

Stocks on Wall Street rebounded to trade more than 1% higher after the Fed's surprise statement. But the Dow industrials, Nasdaq and S&P 500 later pared gains to seesaw erratically on either side of break-even.

"It spooked investors after the strong rebound because it was made right away and it was 50 basis points. So it was larger than people (were expecting), and some may be thinking, 'Ooh, are things worse than we think?'" said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio.

Shares in Europe rose to trade more than 2% higher on the day, while MSCI's all-country world index rose almost 1%.

The Group of Seven finance officials said earlier in Tokyo they would use all appropriate policy tools to achieve strong, sustainable global growth and safeguard against downside risks posed by the coronavirus. Investors shrugged off the statement as too little to confront the fast-moving virus.

The Fed's rate cut and G7 statement came after global stocks last week suffered their worst rout in a decade on fears the disruption to supply chains, factory output and global travel caused by the epidemic could seriously slow the world economy.

MSCI's gauge of stocks across the globe gained 1.16% and emerging market stocks rose 1.67%.

The pan-European STOXX 600 index rose 2.08%

The Dow Jones Industrial Average rose 91.39 points, or 0.34%, to 26,794.71, the S&P 500 gained 18.38 points, or 0.59%, to 3,108.61 and the Nasdaq Composite added 60.52 points, or 0.68%, to 9,012.68.

Spot gold added 3.2% to $1,640.56 an ounce.

First Published:Mar 3, 2020 9:38 PM IST