Steep losses in China stocks hit Asia as virus fears grow

Asian shares tumbled on Thursday, led by the biggest slide in Chinese stocks in more than eight months, as investors grew more anxious about the spread of novel coronavirus in China just as millions prepared to travel for the Lunar New Year.

The likely hit to airline travel from the contagion sent oil futures skidding to seven-week lows, while the International Energy Agency's warning of an oil surplus and a larger-than-expected increase in U.S. crude inventories re-kindled fears of excess supply.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.07 percent.

Chinese shares suffered a steep 3.04 percent loss, on course for their biggest daily decline since May 6, 2019, when U.S. President Donald Trump's threats of additional tariffs on Chinese goods roiled financial markets.

An investor looks at a stock quotation board at a brokerage office in Beijing, China, January 3, 2020. /Reuters Photo

Shares in Hong Kong also took a beating, down 1.91 percent, while Japan's Nikkei stock index slid 0.99 percent.

The Chinese yuan fell to a two-week low, while safe-havens such as the Japanese yen, gold, and U.S. Treasuries rose as a travel blockade of the Chinese city Wuhan, the epicenter of the outbreak, started earlier on Thursday.

Deaths in China from the new 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 which broke out in China and killed nearly 800 people in a global pandemic.

"Markets are expressing concern about the growth outlook," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

"The coronavirus has introduced some caution. There is no reason to expect a global pandemic now, but there is some repricing in financial markets."

There are fears the virus could spread rapidly, because millions of Chinese travel domestically and abroad during the week-long Lunar New Year holidays, which start on Friday.

Air China, China's flagship carrier, skidded 4.06 percent to the lowest in nine weeks. Shares of Australia's Qantas Airways Ltd fell 1.77 percent, while Japan Airlines Co dropped 1.82 percent and rival air carrier ANA Holdings Inc declined 1.84 percent.

(With input from Reuters)