TOKYO/NEW YORK (Reuters) – Asian shares and U.S. stock futures dipped into the red on Tuesday, erasing earlier gains as a renewed decline in oil prices overshadowed optimism about the easing of coronavirus-related restrictions seen globally.

FILE PHOTO: People wearing protective face masks, following an outbreak of the coronavirus, are reflected on a screen showing Nikkei index, outside a brokerage in Tokyo, Japan February 28, 2020. REUTERS/Athit Perawongmetha

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.3%. Shares in China .CSI300 fell 0.7% and South Korean shares .KS11 fell 0.22%.

Oil futures slumped after the largest U.S. oil exchange-traded fund said it would sell all its front-month crude contracts to avoid further losses as prices collapse.

Some investors are hoping the worst may be over for the world economy as more countries allow businesses to re-open, but others see reasons to remain cautious, especially as a coronavirus vaccine has yet to be developed.

“We are less optimistic and expect a slower recovery in the world economy,” Commonwealth Bank of Australia said in a research note.

“The risk of reintroducing restrictions is a risk to market participants’ optimistic outlook for a quick resumption of normal economic activity.”

All three major U.S. stock averages advanced on Monday and are all now within 20% of their record closing highs reached in February.

The benchmark S&P 500 is on track for its best month since 1987, after trillions of stimulus dollars helped U.S. equities claw back much of the ground lost since the coronavirus crisis brought the economy to a grinding halt.

But some analysts believe gains may be limited unless there is progress in finding treatments for the disease.

From Italy to New Zealand, governments announced the easing of restrictions, while Britain said it was too early to relax them there. New York state is not expected to reopen for weeks..

Oil prices weakened again on persistent concerns about oversupply and a lack of storage space. The front-month contract was trading at lower-than-usual volumes on Monday as traders moved to later months in futures contracts.

U.S. crude CLc1 skidded 14.24% to $10.96 a barrel while Brent crude LCOc1 fell 4.05% to $19.18 per barrel.

Shares of United States Oil Fund LP (USO.P), the country’s largest crude ETF, fell more than 16% on Monday, after it said it would sell all of its front-month crude contracts to avoid a repeat of the heavy losses suffered last week.

The U.S. dollar and the euro were little changed as traders refrained from taking big positions before a Federal Reserve policy decision due on Wednesday and a European Central Bank (ECB) meeting Thursday.

The Fed has already announced a raft of measures to lessen the economic blow from the coronavirus pandemic and is expected to stay on hold this week.

The ECB is likely to extend its debt purchases to include junk bonds and provide a backstop for corporate financing.

Major central banks have responded to the economic slump caused by the coronavirus by slashing interest rates, buying more government debt, and taking steps to increase lending to small companies.

Elsewhere in currencies, the Australian dollar AUD=D3 traded near a six-week high of $0.6472 as investors continued to cheer the country’s progress in containing the coronavirus.

Gold, a safe-haven often bought during times of uncertainty, fell for a third consecutive trading session in signs of improving risk appetite.

Reporting by Stanley White in Tokyo and Chibuike Oguh in New York; Editing by Sam Holmes

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