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Reuters
Worries over the continued spread of the coronavirus have hit the financial markets, with stocks from Wall Street to Tokyo declining.
London’s FTSE 100 index fell more than 2%, while in the US the Dow Jones fell 1.4% in early trade on Monday.
Airlines and firms with significant sales in China saw their shares hit.
The coronavirus has killed 81 people in China with almost 3,000 confirmed ill, while at least 44 cases have been confirmed abroad.
The price of oil also fell, with Brent crude dropping 2.5% to $59.15 a barrel.
While recent tensions between the US and Iran had pushed up the price of oil due to concerns over supply, traders now fear demand could drop if China’s economy stalls.
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Shares across Europe saw big declines, with the German Dax and French Cac 40 indexes both down by more than 2.5%.
Among the biggest share price declines in London was luxury clothes maker Burberry, which fell 4.8%. It makes about 16% of its sales in China, one of its fastest-growing markets, and has warned investors that a drop in Chinese spending could spell a decline in its own revenues.
Shares in InterContinental Hotels Group dropped 6.1%. It says China and Hong Kong are a “growing share of our business” and contributes 8% of the firm’s profit.
British Airways owner IAG, which also contains Iberia, fell 6.6%, while HSBC Holdings, which takes most of its profit from Asia, fell 3.2%.
Analysts at research firm Bernstein say Chinese consumers had spent $149bn (£114bn) during the Chinese New Year celebrations last year and that will probably be smaller this year due to travel curbs.
Companies in China have advised staff to work from home in an attempt to slow the spread of the deadly coronavirus.
Businesses are also offering workers longer holidays, as well as telling employees returning from the most affected areas to stay away from work.
Tommy Wu, senior economist at Oxford Economics, said any hit to the Chinese economy would probably be short-lived, hitting performance in the first three months of the year.
“We also expect the Chinese government to roll out measures to stabilise growth, if needed,” he said in a research note. Hong Kong, with its continuing pro-democracy protests, may suffer more, he said.
Janet Mui, global economist at Cazenove Capital, told the BBC’s Today programme that China’s economy could suffer as the outbreak has happened over Chinese New Year, when a lot of shopping is done and gifts exchanged.
“If you look at history the most comparable example would be the Sars episode in 2003,” she said.
China’s annual growth slumped from 11% to 9% in the wake of that outbreak.
China has plenty of business links to the UK. Manchester is a sister city of the locked down city of Wuhan, for example.
Bicester Village, the shopping outlet in Oxfordshire, is said to be the second-most popular tourist attraction in the UK for Chinese tourists after Buckingham Palace.
It declined to comment on whether sales had been hit, but said: “We are monitoring the situation closely as well as the guidance from the World Health Organisation and will be taking any measures as advised by government and expert authorities.”
Luxury goods brands popular in China have all seen their share price fall. LVMH, Kering, L’Oreal and Hermes have all been hit on Monday after seeing record high share prices in the past month.
Oil firms ExxonMobil and Chevron led the losers in US trading, each down more than 1.2%.