Global stocks and oil plunged Monday as panicked investors fled risky assets for safer bets gold, bonds, the dollar and the yen, after China warned that a deadly new coronavirus was spreading fast.
On equity markets luxury goods makers and airlines suffered particularly as Chinese tourist spending is a key factor for them.
China extended its traditional Lunar New Year holidays to buy time in the fight against the epidemic and fears of a repeat of the 2003 SARS outbreak, which also began in China, spooked investors.
Recent record highs on stock markets gave them plenty of room for a reverse.
Key European stock markets closed up to 2.7 percent lower, while on Wall Street the Dow Jones index managed to keep its losses at around 1.5 percent in the late New York morning.
Oil prices were down 2.5 percent or more, having coming off early lows seen on concerns over demand from China, the world's top energy consumer.
"The bottom line is that the virus has become deadly and it has caused a major panic in markets," said Ava Trade analyst Naeem Aslam.
Analysts said there were growing fears the crisis could become as bad as the Severe Acute Respiratory Syndrome (SARS) outbreak that hammered markets and the global economy in 2003.
"Coronavirus fears have gripped the markets... as all the major European equity benchmarks are nursing big losses," said analyst David Madden at trading firm CMC Markets UK.
"Stocks that are connected to China are feeling the pain... as traders are afraid the health crisis will curtail economic activity."
The outbreak has led China to lock down the epicentre of the disease, Wuhan -- a city of 11 million people -- while imposing tight travel restrictions on a number of other cities including Beijing.
The move comes during the Lunar New Year holiday when hundreds of millions of people criss-cross the country and spend huge amounts of money.
Most Asian markets were closed for the Lunar New Year break but Tokyo was open and fell two percent. Bangkok plunged nearly three percent on worries about the Thai travel sector.
The flight to safety saw the yen rally against the dollar, with the Japanese unit now up more than one percent from eight-month lows touched earlier this year.
The dollar however rose against the euro and pound.
Gold, another go-to asset in times of turmoil and uncertainty, seemed headed back towards $1,600 per ounce and the six-year peaks touched at the start of January.
While the main focus is on the spread of the virus, traders will also be keeping an eye on the release of earnings this week from top companies including Apple, Facebook and Samsung.
The oil market had already tumbled more than six percent last week owing to concerns about the virus' effect on demand in China, which is the world's number two economy after the United States.
London - FTSE 100: DOWN 2.3 percent at 7,412.05 points (close)
Frankfurt - DAX 30: DOWN 2.7 percent at 13,204.77 (close)
Paris - CAC 40: DOWN 2.7 percent at 5,863.02 (close)
EURO STOXX 50: DOWN 2.7 percent at 3,677.84
New York - DOW: DOWN 1.4 percent at 28,580.81
Brent Crude: DOWN 2.7 percent at $58.30 per barrel
West Texas Intermediate: DOWN 2.5 percent at $52.82
Tokyo - Nikkei 225: DOWN 2.0 percent at 23,343.51 (close)
Hong Kong - Hang Seng: Closed for a public holiday
Shanghai - Composite: Closed for a public holiday
Dollar/yen: DOWN at 108.92 yen from 109.28 yen Friday
Euro/dollar: DOWN at $1.1012 from $1.1025
Pound/dollar: DOWN at $1.3054 from $1.3073
Euro/pound: UP at 84.36 pence from 84.34 pence
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