* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* China says virus ability to spread getting stronger
* Safe-haven assets in demand; oil drops sharply
* Some Asian markets closed for Lunar New Year holiday
By Tomo Uetake
TOKYO, Jan 27 (Reuters) - Stocks tumbled on Monday as
investors grew increasingly anxious about the economic impact
of China's spreading virus outbreak, with demand spiking for
safe-haven assets such as the Japanese yen and Treasury notes.
Japan's Nikkei average .N225 suffered a steep 1.8% loss,
on track for the biggest one-day fall in three weeks.
U.S. S&P 500 mini futures ESc1 was last down 0.9%, having
fallen 1.3% in early Asian trade.
"All you see is headlines about the coronavirus, giving
investors a reason to sell the markets," said Takeo Kamai, head
of executions services at CLSA in Tokyo.
The ability of the coronavirus to spread is getting stronger
and infections could continue to rise, China's National Health
Commission said on Sunday, with more than 2,700 people globally
infected and 80 in China killed by the disease.
China announced it will extend the week-long Lunar New Year
holiday by three days to Feb. 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. Market participants kept a wary eye on developments around
the virus, which the World Health Organization (WHO) last week
deemed "an emergency in China," but not, as yet, for the rest of
the world. MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was off 0.2%, although trade in the region has
already slowed for the Lunar New Year and other holidays, with
financial markets in China, Hong Kong and Australia 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 .SPX lost 0.9%, the Dow Jones Industrial
Average .DJI fell 0.6% and the Nasdaq Composite .IXIC shed
0.9% after the Centers for Disease Control and Prevention
confirmed a second case of the virus on U.S. soil. U.S. Treasury prices advanced, pushing down yields further,
with the benchmark 10-year notes US10YT=RR dropping to a
3-1/2-month trough of 1.627% in early Asian trade.
In the currency market, the concerns about the virus
supported the yen, often perceived as a safe haven because of
Japan's net creditor status.
The Japanese currency strengthened as much as 0.5% to 108.73
yen per dollar JPY= , its 2-1/2-week high.
The euro EUR= last stood at $1.1033 versus the dollar,
having fallen to its eight-week low of $1.1019 on Friday.
The offshore yuan CNH=D3 dropped more than 0.3% to 6.9625
against the dollar, its weakest level since Jan 8.
The heightened fears of the economic impact of the
coronavirus also pressured oil and other commodity prices,
except safe-haven gold.
U.S. West Texas Intermediate (WTI) crude futures CLc1
plummeted more than 3% to hit a 3-1/2-month low of $52.15 in
early trade.
"Investors will react quickly to any sign of negativity and
this is no exception as China announces that the issue has
become an emergency. This could keep oil prices fragile until
the coronavirus shows signs of slowing down," said Mihir
Kapadia, chief executive at Sun Global Investments.
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