* 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 tumble in Chinese stocks in more than eight
months, as concern mounted about a new coronavirus outbreak in
China.
With millions of Chinese preparing to travel for the Lunar
New Year, the potential for the disease to spread, along with
the tendency of traders to reduce their exposure before
holidays, left markets struggling.
Safe options such as Japan's yen and government bonds rose,
Wall Street looked set to follow Europe and Asia lower .EU .N
and commodity markets saw both oil and metals prices buckle.
O/R MET/L
"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 had skipped to a near three-year high
against the euro overnight EURCHF= CHF= but paused in Europe
as the focus turned to the day's big central bank action. /FRX
Norway had already left its interest rates unchanged, but
the main event was the European Central Bank's first meeting of
the year, where it is expected to give some pointers on its
first formal policy review in 17 years.
Economists expect the review to take most of the year and
will span topics from the bank's inflation target to digital
money and the fight against climate change.
New ECB President Christine Lagarde has floated radical
ideas such as the central bank buying bonds that fund
environmental improvements, though the limited number of them at
the moment could prove a hurdle.
"Quite a lot has happened in the last 17 years," Rumpeltin
added. "They are due for a rethink."
WUHAN BAN
Asia has been gripped by the coronavirus outbreak.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 1%. 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. .SS
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 as the dollar went
flat.
Gold and U.S. Treasuries also rose as China blocked travel
to and from Wuhan, the city where the coronavirus outbreak
originated. Gold later reversed in Europe as part of a wider
fall in metals markets that left copper at a 6-week low and
walloped 2% off nickel. GOL/ MET/L
Deaths in China from the coronavirus rose to 17 on
Wednesday, with nearly 600 cases confirmed.
"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."
Time to rethink inflation mandates? https://tmsnrt.rs/36Vv8YB
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