European stock markets extended their decline as concerns over the spread of the coronavirus rippled through markets for a second day.

A tentative rebound quickly turned into a fresh wave of selling through the European morning on Tuesday, with the Stoxx 600 index falling as much as 1.1 per cent to bring its losses for the week to near 5 per cent.

Spain’s Ibex dropped more than 1.3 per cent, following news a hotel on the Canary Islands has been quarantined after an Italian doctor tested positive for the coronavirus Covid-19. Italian stocks slipped 0.9 per cent and have lost more than 6 per cent of their value this week, with more cases reported in the country on Tuesday.

Futures tied to the S&P 500 indicated more moderate losses at the open on Wall Street.

The losses follow one of the most significant global sell-offs since the financial crisis on Monday, as investors moved out of risk assets and sent stocks tumbling on signs the spread of the virus was accelerating outside of China.

The yield on the US 10-year Treasury note fell 2 basis points to 1.3538 per cent, edging closer to its all-time lows as investors moved into the debt that is prized for relative safety in time of economic turmoil.

Japanese equities caught up with the global sell-off as the benchmark Topix fell 3 per cent as traders returned from a three-day weekend, while the yen weakened 0.1 per cent to ¥110.83 per dollar.

Elsewhere in Asia, South Korea’s Kospi index recovered by 1.2 per cent. Washington and Seoul said on Tuesday that they were considering scaling back joint military exercises in South Korea, one of the countries worst hit by the virus outside of China.

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Hong Kong’s Hang Seng index was little changed after Standard Chartered said the city’s economy would be hit harder by the coronavirus than it was by the Sars 2003 outbreak. 

China’s onshore traded renminbi gained 0.2 per cent to 7.0170 per US dollar. The prices of Brent crude, the international oil marker, fell 0.3 per cent to $56.10 a barrel after falling 3.8 per cent on Monday.

Additional reporting by Leo Lewis in Tokyo



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