GLOBAL MARKETS-Virus fears keep stocks red; ECB gets ready to rethink

* Risk assets slump in Asia, led by losses in Chinese stocks

* Worries about China virus grow before Lunar New Year

* Oil drops on threat from virus, rise in supply

* European stocks fall, ECB policy review in focus

By Marc Jones

LONDON, Jan 23 (Reuters) - World shares fell on Thursday,

led by the biggest decline in Chinese stocks in more than eight

months, as concern mounted about the spread of a deadly virus in

China.

With millions of Chinese preparing to travel for the Lunar

New Year, the potential the disease to spread, along with the

tendency of traders to reduce their exposure before holidays,

left markets struggling.

Safe options like Japan's yen and government bonds rose,

while European stocks followed Asia lower .EU . The threat to

airline travel and an increase in supply pushed oil prices to

seven-week lows. O/R

"Ultimately, the coronavirus is a slow-burning but important

story for markets that is likely to last for months rather than

just a few days," said TD Securities' European head of currency

strategy, Ned Rumpeltin. "And the natural go-to currencies when

there are headlines like these are the yen and the Swiss franc."

The Swiss franc rose to a near three-year high against the

euro overnight CHF , but it was trading little changed as the

focus in Europe turned to its central banks. /FRX

Norway's central bank had already left its interest rates

unchanged. The European Central Bank holds its first meeting of

the year later on Thursday, where it's expected to outline its

first formal policy review in 17 years.

It will probably last for most of the year and span topics

from the inflation target to digital money and the fight against

climate change.

"Quite a lot has happened in the last 17 years," Rumpeltin

said. "They are due for a rethink."

WUHAN BAN

As the virus took hold, MSCI's broadest index of

Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.07%.

Chinese shares .CSI300 dropped 3.1%, the biggest daily decline

since May, when U.S. President Donald Trump's threats of

additional tariffs on Chinese goods rocked financial markets.

Hong Kong .HSI shares ended down 1.5% and Japan's Nikkei

index .N225 slid 1%.

Among major currencies, the Chinese yuan fell to a two-week

low, on course for its worst week since August. The Japanese yen

climbed 0.2% to secure a third day of gains.

Gold and U.S. Treasuries also rose as China blocked travel

to and from Wuhan, the city where the coronavirus outbreak

originated. Gold later recovered in Europe.

Deaths in China from the coronavirus rose to 17 on

Wednesday, with nearly 600 cases confirmed. The outbreak has

evoked memories of Severe Acute Respiratory Syndrome (SARS) in

2002-2003, another coronavirus that broke out in China and

killed nearly 800 people worldwide. "The coronavirus has introduced some caution," said Michael

McCarthy, chief market strategist at CMC Markets in Sydney.

"There is no reason to expect a global pandemic now, but there

is some repricing in financial markets."