BEIJING (Reuters) – China’s factory prices fell at the sharpest rate in four years in April, highlighting weakening industrial demand in the world’s second-largest economy as the coronavirus pandemic slams global growth.

The producer price index (PPI) fell 3.1% from a year earlier, the National Bureau of Statistics said in a statement on Tuesday, compared with a 2.6% drop tipped by a Reuters poll of analysts and a 1.5% decline in March.

Data released last week showed China’s exports unexpectedly grew in April from a year earlier, although a sharper-than-expected decline in imports signalled weak domestic demand.

China is trying to recover from its first economic contraction on record during the January-March quarter, when the economy was paralysed by curbs to slow the spread of the virus that has killed more than 4,600 people in the mainland. But the spread of the virus beyond China now threatens to push the global economy into a deep recession.

Chinese factories have been hit by a plunge in overseas orders and face rising inventories and falling profits, while many have let workers go to cut costs.

As China’s central bank ramped up economic support, banks extended 1.7 trillion yuan ($240.05 billion) in new yuan loans in April, significantly more than a year earlier, while growth of broad money supply also quickened.

Meanwhile, China’s consumer price index (CPI) rose 3.3% from a year earlier, slower than a 3.7% rise tipped by a Reuters poll of analysts and a 4.3% increase in March.

That was largely due to slowing food price growth, which rose over 18% in March. But it still rose 14.8% last month, led by a 96.9% jump in pork prices. Non-food prices rose 0.4% in April, the data showed.

Core inflation – which excludes food and energy prices – remained benign last month at 1.1%，down from 1.2% in March.

Analysts expect further monetary easing soon, although Beijing is likely to rely on fiscal stimulus to cushion growth.

By Herbert Lash and Suzanne Barlyn

NEW YORK (Reuters) – Asian equities and oil prices were set to slip on Tuesday amid growing investor worries about a second wave of coronavirus infections after the Chinese city where the pandemic originated reported its first new cases since its lockdown was lifted.

The central Chinese city of Wuhan reported five new confirmed cases on Monday, casting doubts over efforts to lower coronavirus-related restrictions across the country as businesses restart and individuals went back to work.

Hong Kong’s Hang Seng index futures (HSI) <.HSIc1> were down 0.68% while {{178|Japan’s NiNikkei 225 futures (NKc1) were off 0.1%.

“My feeling is that it will be flat to slightly down across Asia,” said Shane Oliver, head of investment strategy and economics for AMP (OTC:AMLTF) Capital in Sydney, citing concerns about coronavirus clusters and a potential second wave.

Australian S&P/ASX 200 futures fell 0.35%.

The S&P 500 barely closed higher on Wall Street, but the Nasdaq posted its sixth consecutive advance as technology and healthcare shares provided the biggest lift to all three major U.S. stock indexes.

The Nasdaq is now within 10% of its all-time high reached in February.

A jump in coronavirus cases in South Korea and Germany weighed on Wall Street sentiment even amid signs more parts of the United States could soon emerge from lockdowns.

A second wave of infections would likely snuff out the recent rally in equity markets and lead investors to position for a severe and prolonged global recession.

There were some positive cues for markets with China reporting April credit growth accelerated to 12% from a year ago, a sign that the recovery from a collapse in the first quarter remained intact, the National Australia Bank said in a report.

MSCI (NYSE:MSCI)’s gauge of stocks across the globe shed 0.04% following broad declines in Europe.

On Wall Street, the Dow Jones Industrial Average (DJI) fell 0.45%, the S&P 500 (SPX) gained 0.01% and the Nasdaq Composite (IXIC) added 0.78%.

The dollar, defying its typical safe-haven status, rose on Monday, even as investors added risk to their portfolios, buying U.S. stocks and selling Treasuries.

Investors in FX markets had mixed risk expectations, with an eye on warnings of a second wave of COVID-19 infections as more countries eased lockdown restrictions.

Bond markets signaled that a global economic recovery will be slow. Two-year U.S. government bond yields have hit record lows at 0.105% and Fed fund futures last week turned negative for the first time ever.

Benchmark 10-year notes last fell 11/32 in price to yield 0.7147%, from 0.681% late on Friday.

In commodity markets, oil prices slid as the pandemic eroded global demand.

U.S. crude recently fell 0.08% to $24.72 per barrel and Brent was at $30.09, down 2.84% on the day.