As the death toll from the Chinese epidemic jumped to 80 with those affected worldwide approaching 3,000, analysts say there are growing fears the crisis could become as bad as the SARS outbreak that hammered Asian markets in 2003.
World shares slipped to their lowest in two weeks on Monday as worries grew about the economic impact of China's spreading coronavirus, with demand spiking for safe-haven assets such as Japanese yen and Treasury notes.
The death toll from the coronavirus outbreak in China rose to 81 and the virus spread to more than 10 countries, including France, Japan and the United States. Some health experts questioned whether China can contain the epidemic.
Europe stocks slump
By midday in London, MSCI's All-Country World Index, which tracks shares across 47 countries, was down 0.6 percent to its lowest since January 9.
In Europe, stock markets slumped at the start of trading, tracking their counterparts in Asia. The pan-European STOXX 600 index fell 2 percent to its lowest level since January 6, and the Euro Stoxx 50 volatility index jumped to its highest level since December.
"The coronavirus is an economic and financial shock. The extent of that shock still needs to be assessed, but it could provide the spark for an arguably long-overdue adjustment in the capital markets," Marc Chandler, chief market strategist at Bannockburn Securities, told clients.
In Asia, Japan's Nikkei average slid 2 percent, the biggest one-day fall in five months. A Tokyo-listed China proxy, ChinaAMC CSI 300 index ETF, fell 2.2 percent. Many markets in Asia were closed for the Lunar New Year holiday.
US S&P 500 mini futures were last down 1.36 percent, suggesting an open in the red on Wall Street later. The VIX volatility index, also known as Wall Street's "fear gauge", hit its highest levels since October.
'Depressed in near term'
The ability of the coronavirus to spread is getting stronger and infections could continue to rise, China's National Health Commission said on Sunday. More than 2,800 people globally have been infected.
China announced it will extend the week-long new year holiday by three days to Febuary 2 and schools will return from their break later than usual. Chinese-ruled Hong Kong said it would ban entry to people who have visited Hubei province in the past 14 days.
"While the continued spread of the virus is concerning, we were expecting that the outbreak could worsen before being brought under control," UBS strategists wrote in a research note, adding that they expected impact on the region's economy and risk assets to be short-lived.
"Sentiment may remain depressed in the near term, especially for those sectors most impacted, however, we retain a positive outlook for emerging market stocks, including a preference for China equities within our Asia portfolios."
MSCI's broadest index of Asia-Pacific shares outside Japan was off 0.45 percent, although markets in China, Hong Kong, Taiwan, South Korea, Singapore and Australia were closed on Monday.
All three major Wall Street indexes closed sharply lower on Friday, with the S&P 500 seeing its biggest one-day percentage drop in over three months.
The S&P 500 lost 0.9 percent, the Dow Jones Industrial Average 0.6 percent and the Nasdaq Composite 0.9 percent. The US Centers for Disease Control and Prevention has confirmed five cases of the virus on US soil.
US Treasury prices advanced, pushing down yields. The benchmark 10-year note's yield fell to a three-and-half-month trough of 1.6030 percent. It last traded at 1.6321 percent.
Elsewhere in bonds, the Italian 10-year yield fell to a three-month low Monday after right-wing leader Matteo Salvini failed in his bid to overturn decades of leftist rule in the northern region of Emilia-Romagna on Sunday, bringing some relief to the government.
In the currency market, the Japanese yen strengthened as much as 0.5 percent to 108.73 yen per dollar, a two-and-a-half-week high.
The euro last traded unchanged to the dollar.
China's yuan tumbled to a 2020 low, and commodity-linked currencies such as the Australian dollar fell, as growing fears about the spread of a coronavirus from China pushed investors into safe assets.
The coronavirus outbreak also pressured oil and other commodity prices.
US West Texas Intermediate crude futures plummeted 2.69 percent to a three-and-a-half-month low of $52.13. Brent shed more than 3 percent to a three-month low of $58.50 per barrel.
Spot gold rose as much as 1.0 percent to $1,585.80 per ounce, the highest level since Jan. 8, as the coronavirus outbreak pushed up demand for the safe-haven metal.
Virus outbreak rams global tourism, costing billions
Tourism from China was already weakening even before a new virus forced much of the country into a standstill.
With tens of millions of Chinese ordered to stay put and many others opting to avoid travel as the new coronavirus spreads, tourism around the globe is taking a heavy hit during one of the biggest travel seasons, the Lunar New Year.
In Thailand, a favourite tropical destination for Lunar New Year travel, officials estimate potential lost revenue at $1.6 billion (50 billion baht).
In Asia and much farther away, hotels, airlines, cruise operators and others who depend on big-spending Chinese tourists are ruing their absence.
On Monday, China extended the week-long holiday by an extra three days to February 2 to help prevent the epidemic from spreading further, as authorities announced that 2,744 people had fallen ill and 80 had died from the new virus first found in the central Chinese city of Wuhan.
Shanghai pushed the holiday's end back to February 9.
Travel agencies in China were told to cancel group tourism, and governments around the region were restricting travel from Wuhan, closely monitoring other travellers and helping arrange evacuations of some foreigners stuck in Wuhan.
So far, 17 Chinese cities that are home to more than 50 million people have imposed lockdowns.
In Thailand's capital, Bangkok, many drugstores ran out of surgical masks and the number of Chinese tourists appeared to be much smaller than usual for the Lunar New Year. The government announced it was handing out masks, and that the airport rail link would be disinfected.
The Tourism Council of Thailand estimated revenues for the holidays would be at least $1.6 billion (50 billion baht () lower than usual, based on an estimate of Chinese tourists usually spending about $1,600 (50,000 baht) each.
That followed a downturn in arrivals from China in early 2019 after several boating accidents raised questions about the safety standards of tour operators.
Overall, a few months ago the China Outbound Tourism Research Institute predicted 7 million outbound trips for Chinese New Year this year, up from 6.3 million in 2019.
Anti-government protests in Hong Kong have left many from the Chinese mainland wary of visiting that popular destination and more likely to travel farther afield.
The same goes for the self-governed island of Taiwan, where heavy voter turnout in elections earlier this month favoured candidates who do not favour uniting with Beijing as China's leaders insist must happen eventually.
Chinese made about 134 million trips in 2019, according to official figures, up 4.5 per cent from a year earlier but a much slower rate of increase than the nearly 15 per cent growth seen in 2018.
Hong Kong, Thailand, Japan, Vietnam and South Korea tend to be favourite destinations.
Tourism from China to the US was already on a decline even before the coronavirus hit, hurt by the prolonged trade dispute between Beijing and Washington.
In 2018, travel from China to the US fell for the first time in 15 years, according to the National Travel and Tourism Office, which collects data from US Customs forms.