World stock markets and oil prices were hammered Monday by fears of a coronavirus pandemic, while gold hit a seven-year peak on safe-haven buying, dealers said.

One of the hardest hit European markets was in Milan, which gave up 5.4 percent following reports of a fifth death in Italy amid the COVID-19 epidemic.

In northern Italy, villages have been sealed off and security measures enforced to stem the spread of the disease.

Traders' screens flashed red across Europe meanwhile, with Frankfurt and Madrid falling by 4.0 percent, Paris shedding 3.9 percent and London losing 3.3 percent.

In midday New York exchanges, the Dow Jones index was down by 3.3 percent.

Brent oil prices fell by 5.0 percent as the crisis fuelled worries about global energy demand.

Conversely, on the London Bullion Market gold spiked to $1,689.31 per ounce, a level last seen in January 2013, before easing back to $1,676.50 as investors sought the precious metal as a safety measure amid the market turbulence.

"The root of the problem is this: there is burgeoning fear that the shutdown effect that has hit China's economy is going to take over elsewhere, dealing another blow to global growth, and earnings growth prospects," commented Patrick O'Hare at

"Not surprisingly, the (US) Treasury market has been a beneficiary of the risk-off move in stocks. The 10-year note yield is down eight basis points to 1.39 percent and flirting with its all-time low yield of 1.36 percent seen in July 2016," he added.

US Treasury bonds are another popular safe haven investment during economic downturns.

The World Health Organization chief on Monday warned countries to prepare for a "potential pandemic" of new coronavirus, calling the sudden increase in cases in Iran, Italy and South Korea "deeply concerning".

Seoul's stock market shed 3.9 percent as South Korea announced a surge in coronavirus infections, while Hong Kong gave up 1.8 percent.

Shanghai slipped by just 0.3 percent however owing to a series of economy-boosting measures by Chinese officials.

Last week, traders were broadly optimistic that the virus -- which has killed nearly 2,600 and infected 80,000 -- was being contained outside China, before a spurt of infections and deaths in other countries fanned fears of a global outbreak.

"It would appear the coronavirus has finally caught up with the markets," OANDA analyst Craig Erlam told AFP.

"As we saw in China, this can spread rapidly and be very difficult to contain."

Travel and tourism linked firms were particularly vulnerable, with Sydney-listed airline Qantas plunging more than seven percent, and Air China off by nearly six percent in Hong Kong.

A jump in the number of deaths and infections in South Korea and elsewhere outside China has fanned concerns the COVID-19 outbreak could last longer and hammer the global economy
A jump in the number of deaths and infections in South Korea and elsewhere outside China has fanned concerns the COVID-19 outbreak could last longer and hammer the global economy AFP / Jung Yeon-je

"One thing is very clear, travel and tourism in Asia are taking a beating," analysts at the Dutch bank ING noted.

In Europe, British low-cost airline EasyJet saw its share price crash by more than 16 percent, while German flag carrier Lufthansa lost 8.8 percent.

Milan - FTSE Mib: DOWN 5.4 percent at 23,427 points (close)

Madrid - IBEX 35: DOWN 4.1 percent at 9,483.50 (close)

London - FTSE 100: DOWN 3.3 percent at 7,156.83 (close)

Frankfurt - DAX 30: DOWN 4.0 percent at 13,035.24 (close)

Paris - CAC 40: DOWN 3.9 percent at 5,791.87 (close)

EURO STOXX 50: DOWN 4.0 percent at 3,647.98

New York - Dow: DOWN 3.3 percent at 28,035.12

Seoul - KOSPI: DOWN 3.9 percent at 2,079.04 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,031.23 (close)

Hong Kong - Hang Seng: DOWN 1.8 percent at 26,820.88 (close)

Tokyo - Nikkei 225: Closed for a public holiday

Brent Crude: DOWN 5.0 percent at $55.57 per barrel

West Texas Intermediate: DOWN 4.7 percent at $50.85

Gold: UP at $1,676.50 per ounce from $1,643.41 late on Friday

Euro/dollar: UP at $1.0859 from $1.0847

Pound/dollar: DOWN at $1.2918 from $1.2964

Euro/pound: UP at 84.05 pence from 83.67 pence