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UPDATE 3-U.S. to invoke powers to boost output of protective gear for coronavirus fight

Steve Holland and Richard Cowan

coronavirus fight@ (Updates with Azar comments)

WASHINGTON, Feb 28 (Reuters) - The United States will invoke special powers to boost production of masks, gloves, gowns and other items to combat the coronavirus, Health and Human Services Secretary Alex Azar said on Friday, as the Trump administration came under criticism from Democrats for its response to the crisis.

With more countries reporting new infections, companies starting to curtail employees' travel and global stock markets on the precipice of a free fall, U.S. health officials scrambled to deal with the prospect of a widening domestic outbreak. "We will use the Defense Production Act as necessary to enable that our contracts go to the front of the line," Azar said in a briefing at the White House. "That is an authority that we have, and we will use it to acquire anything we need to acquire."

Two U.S. officials told Reuters on Thursday that President Donald Trump's administration was considering invoking special powers through the law to rapidly boost production of key materials for national security or other reasons.

The number of confirmed U.S. cases is still relatively small at around 60, most of them repatriated American passengers from the Diamond Princess cruise ship docked in Japan, but there are growing fears that the country is on the cusp of wider outbreak.

Anthony Fauci, a doctor who heads the National Institute of Allergy and Infectious Diseases, said in a closed-door briefing in the U.S. House of Representatives that the sustained spread of the coronavirus in so many countries meant there would many more infections in the United States, according to a source.

Fauci added that it was unlikely the virus would disappear next year and he warned lawmakers the country did not have enough testing resources, the source said on condition of anonymity.

The outbreak started in China late last year and has since spread beyond the borders of the world's second-largest economy. More countries, including Denmark and the Netherlands, reported their first cases on Friday and the World Health Organization said the outbreak could spread worldwide.

A vaccine may take up to 18 months to develop, health officials have said.

U.S. and global stocks plummeted as rattled investors braced for the prospect that a pandemic could further dent an already slowing world economy, increasing the pressure on governments to quickly respond to the crisis.

The S&P 500 index was down about 2.5% in late afternoon trading after paring heavier losses earlier in the session. But it was still on track to notch its worst week since the 2008 global financial crisis. The Dow Jones Industrial Average fell 2.5%.

Amazon.com Inc, the world's largest online retailer, said all its employees should defer non-essential travel including within the United States to guard against the spread of the coronavirus.

On Capitol Hill, House members were advised to establish plans for alternative work arrangements in case the coronavirus becomes widespread in the country, Sergeant-at-Arms Paul Irving wrote to lawmakers.

The White House's top economic adviser, Larry Kudlow, told reporters the U.S. economy was "sound" and said the Trump administration was not planning to take any "precipitous" policy actions at this time.

Federal Reserve Chair Jerome Powell said the coronavirus posed evolving risks to economic activity, adding that the U.S. central bank was "closely monitoring" developments and would act as appropriate to support the economy.

TRUMP RE-ELECTION

Trump this week said the risk of coronavirus risk to Americans remained "very low," but he has been increasingly alarmed by the reaction of the U.S. stock market, which he considers a barometer of the economy's health and sees as important to his re-election in November.

In tweets overnight, Trump said the coronavirus virus had spread "very slowly" to the United States and he defended his administration's response.

Mick Mulvaney, the White House's acting chief of staff, played down the crisis, telling conservatives at a conference in Washington that wall-to-wall news coverage of the disease is a ploy to hurt Trump.

But prominent Democrats accused the White House of botching its handling of the crisis and preventing health officials and scientists from properly informing the public about the extent of the coronavirus threat.

Former Vice President Joe Biden, a leading contender in the race for the Democratic presidential nomination, said Trump and Vice President Mike Pence had limited Americans' access to information about the virus.

"Trump and Pence decided that the public health experts cannot inform the public on their own whats going on," Biden said at a campaign event in Sumter, South Carolina. "Now the president wont let other people tell the truth."

Pence was tapped by the White House this week to lead the nation's coronavirus response.

Funding to combat the crisis has become a political issue. The White House is seeking $2.5 billion from Congress to boost the government's response. Senate Democratic Leader Chuck Schumer has called for $8.5 billion.

The Democratic-controlled House could vote as soon as next week on emergency funding to cope with the anticipated medical and economic costs of an outbreak, said a congressional source, who added the price tag could be in the range of $6 billion to $8 billion.

The U.S. Centers for Disease Control and Prevention said it has revised its criteria for who should be tested for the coronavirus and is ramping up testing capabilities.

"Our goal is to have every state and local health department online and doing their own testing by the end of next week," Nancy Messonier, a CDC official, said in a conference call with reporters.

China, where the coronavirus started, has borne the brunt of the outbreak, recording nearly 80,000 infections and almost 2,800 deaths. Countries other than China now account for about three-quarters of new infections.

U.S. philanthropist Bill Gates said the coronavirus was starting to behave like a "once-in-a-century" pathogen, and he urged wealthy nations to help low and middle-income countries strengthen their health systems in hopes of slowing its spread.

(Reporting by Richard Cowan, David Morgan, Susan Heavey and Makini Brice Additional reporting by Howard Schneider in Fort Smith, Arkansas, Lisa Lambert in Washington and Jonathan Allen and Michael Erman in New York Writing by Paul Simao Editing by Alistair Bell)