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US STOCKS-Wall Street steady as virus fears build; E*Trade surges on buyout deal

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* Morgan Stanley falls on $13 bln deal to buy E*Trade

* E*Trade on pace for best day in more than a decade

* L Brands skids on deal to sell Victoria’s Secret

* Futures down: Dow 0.08%, S&P 0.04%, Nasdaq 0.21% (Updates to open)

Feb 20 (Reuters) - U.S. stocks were little changed on Thursday as a rise in the number of coronavirus cases outside China raised more concerns about the global impact of the epidemic, while a multi-billion dollar buyout deal for E*Trade Financial Corp boosted shares of the online discount brokerage.

E*Trade jumped 24.2% after Morgan Stanley offered to buy it in a $13 billion stock deal, the biggest acquisition by a Wall Street bank since the global financial crisis.

Morgan Stanley’s shares fell 3.9%.

The mood elsewhere was more subdued, as the number of new coronavirus cases climbed in South Korea and Japan reported two new deaths. Research also suggested that the virus was spreading faster than previously thought.

“There is still uncertainty about how long this (outbreak) is going to last and how big the economic effect is going to be, not just on China, but on supply chains around the world,” Scott Brown, chief economist at Raymond James in St. Petersburg, Florida, said.

Recent data from China has pointed to a slowdown in the outbreak, but the figures partly reflect a change in the diagnostic method, adding a degree of skepticism to whether the daily tallies accurately reflect the spread of the virus.

“There is longer term optimism,” said Brown. “Once (the virus) is contained, you are going to see a snap back in growth.”

Recent policy easing by China, a largely better-than-expected fourth quarter earnings season and hopes that the economic jolt from the coronavirus will be short-lived have pushed Wall Street’s main indexes to new highs in recent weeks.

Investors also digested comments from U.S. Federal Reserve Vice Chair Richard Clarida, who showed little alarm about the potential of the coronavirus outbreak to alter the central bank’s interest rate policy and said the domestic economy is strong.

At 10:00 a.m. ET the Dow Jones Industrial Average was down 19.67 points, or 0.07%, at 29,328.36; the S&P 500 was down 0.41 points, or 0.01%, at 3,385.74; and the Nasdaq Composite fell 3.95 points, or 0.04%, to 9,813.23.

Five of the 11 major S&P sectors were lower with healthcare stocks leading losses. Energy stocks firmed 0.6%, tracking higher oil prices.

In other corporate news, ViacomCBS Inc slumped 18% as its earnings fell short of revenue and profit expectations in its first quarterly earnings results since closing its merger.

L Brands Inc slid 2.2% on plans to sell a majority stake in its Victoria’s Secret unit to investment firm Sycamore Partners, valuing the lingerie brand at $1.1 billion.

Advancing issues outnumbered decliners by a 1.48-to-1 ratio on the NYSE and by a 1.25-to-1 ratio on the Nasdaq.

The S&P index recorded 21 new 52-week highs and two new lows, while the Nasdaq recorded 76 new highs and 28 new lows. (Reporting by Medha Singh in Bengaluru; Editing by Bernard Orr)