Investor nerves over the spread of a deadly new virus from China hammered Asian equities and oil benchmarks on Thursday, as authorities moved to contain the disease.

More than 570 people have been infected with the coronavirus across China and Wuhan, the city at the centre of the outbreak, has been placed under effective quarantine.

Shanghai tumbled 2.8 percent in the final day of trading before a weeklong market holiday for the Lunar New Year, when hundreds of millions of people travel across China -- raising fears of the contagion spreading further.

It was the biggest pre-Lunar New Year fall on record for the bourse.

Hong Kong slightly pared losses to finish down 1.5 percent while Tokyo was 1.0 percent lower.

OANDA senior market analyst Jeffrey Halley said it was "quite understandable that some money would be taken off the table until the true extent of the coronavirus issue becomes obvious".

The virus has caused alarm because of its similarity to SARS (Severe Acute Respiratory Syndrome), which killed hundreds of people in 2002-2003.

"China's importance in the overall global supply chain and the fact they are a huge export market for many countries... opens up a more unfavourable global outcome this time around," Stephen Innes, chief market strategist of AxiCorp, said in a note.

Oil prices were hit hard in overnight trade with both major indexes down by more than 1.3 percent.

"Given the importance of China for oil demand and having the outbreak falling on the cusp of peak domestic travel season, the timing is particularly damaging," Innes said.

The World Health Organization has so far demurred from declaring a global health emergency -- a rare instrument used only for the worst outbreaks.

China had taken "very, very strong measures" to contain the outbreak, WHO chief Tedros Adhanom Ghebreyesus said on Wednesday.

Li Shiyu, managing director at Guangdong Xiaoyu Investment Management, told Bloomberg News that a turnaround in sentiment would depend on the number of new cases in coming weeks.

"The epidemic may reach a peak in two weeks and hopefully start to slow," he said.

"If there is a trend for new cases to decline, I would consider buying shares again."

China Sars-like virus
More than 570 people have been infected with the coronavirus across China Photo: AFP / HECTOR RETAMAL

The pound strengthened sharply overnight after an industry report showed rising optimism among British manufacturers, upping the chances of a Bank of England rate cut later this month.

But the London bourse was 0.5 percent lower in early trade, extending Wednesday's losses in European markets after US President Donald Trump's renewed threat to impose tariffs on imported cars and a gloomy auto sales forecast.

Trump once again warned of a possible 25 percent punitive tax on European cars if Brussels failed to agree to a trade deal.

Shares in carmakers fell with Daimler dropping more than two percent -- the Mercedes parent company also warning of a likely 2019 earnings shortfall due to massive new charges related to its diesel emissions cheating scandal.

Wall Street equities had finished flat, with indexes barely stirred by either strong local earnings reports or the rising death toll in the coronavirus outbreak.

Tokyo - Nikkei 225: DOWN 1.0 percent at 23,795.44 (close)

Hong Kong - Hang Seng: DOWN 1.5 percent at 27,909.12 (close)

Shanghai - Composite: DOWN 2.8 percent at 2,976.53 (close)

London - FTSE 100: DOWN 0.5 percent at 7,535.09

Euro/dollar: UP at $1.1086 from $1.1082

Pound/dollar: UP at $1.3143 from $1.3049

Euro/pound: DOWN at 84.34 pence from 84.92 pence

Dollar/yen: DOWN at 109.59 yen from 109.93 yen

Brent Crude: DOWN 82 cents at $62.39 per barrel

West Texas Intermediate: DOWN 93 cents at $55.81 per barrel

New York - DOW: FLAT at 29,186.27 (close)

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