* Investors seek safety as cases of coronavirus rise
* Yuan hits three-week low, Aussie lowest since early
December
* Yen bounces but erases most of its early gains
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
LONDON, Jan 27 (Reuters) - China's yuan tumbled more than
half a percent to a 2020 low, while commodity-linked currencies
such as the Australian dollar also fell sharply as escalating
fears about the spread of a coronavirus from China sent
investors into safer assets.
The yen, frequently viewed as a safe haven, was the main
beneficiary, although the move was contained. The Japanese
currency briefly rose to its highest since Jan. 8.
Health authorities around the world are racing to prevent a
pandemic of the virus, which has killed more than 80 people in
China. Nearly 2,800 people have been infected globally. China's
National Health Commission said on Sunday that the ability of
the coronavirus to spread was getting stronger.
China's cabinet announced it would extend the Lunar New Year
holidays to Feb. 2 to strengthen the prevention and control of
the new coronavirus, state broadcaster CCTV reported early on
Monday. The holidays had been due to end on Jan. 30.
Hong Kong has also banned the entry of visitors from China's
Hubei province, where the coronavirus outbreak was first
reported. "While some analysts argue the fear will be worse than
reality with the coronavirus (pointing to the low mortality
rate), no one is anticipating a Spanish flu repeat – the bigger
worry is the economic impact of containment and quarantine
strategies, particularly in China," RBC Capital Markets' global
head of FX strategy Elsa Lignos said.
The offshore Chinese yuan shed 0.6% to 6.9783 yuan per
dollar CNH=EBS , its weakest since Dec. 31.
The Australian dollar, which is heavily exposed to the
performance of China's economy, dropped 0.5% to $0.6787
AUD=D3 , its lowest since Dec. 2. The New Zealand dollar
NZD=D3 also lost 0.5%.
Traders said market moves could be exaggerated due to low
liquidity, because financial markets in China, Hong Kong,
Singapore, and Australia are closed for holidays.
The yen rose to as high as 108.73 yen but by 0830 GMT it had
retraced much of its rise and was last up just 0.1% at 109.12
yen per dollar JPY=EBS .
Yukio Ishizuki, foreign exchange strategist at Daiwa
Securities in Tokyo said the "risk-off mood is likely to
continue for a while."
Moves in other currencies were contained as nervous
investors focused almost solely on the virus and China.
The euro nudged up slightly to $1.1032 EUR=EBS ahead of
the latest reading of a German business sentiment indicator.
The dollar index was flat on the day at 97.857 .DXY .
Sterling held at $1.3075 GBP=D3 . Positioning data last
week showed investors slimming their net long position in the
pound ahead of a knife-edge Bank of England decision on Thursday
about whether to cut UK interest rates.