Meanwhile, stock markets in China fell steeply overnight amid increasing concerns about the economic impact of the coronavirus outbreak on overall economic growth. Nobody knows how much the virus will ultimately hurt economies and corporate profits, let alone human lives, around the world.
Bond yields rose, while the Japanese yen and Swiss franc retreated as risk sentiment improved despite a rising infection rate and death toll from the coronavirus outbreak. The death toll continued to climb, reaching 361 from 17,205 confirmed cases, while large parts of the Chinese industrial sector remain closed, and are likely to do so until February 10 at the earliest. Major global airlines have suspended flights to mainland China.
While shares in many sectors fell on Monday, prices for some Chinese pharmaceutical companies hit their 10% upside limit.
Asian markets are set for another bumpy ride on Monday on fears about the hit to world growth from the rapidly spreading coronavirus, with all eyes on China where trading resumes following the Lunar New Year break. Readings above 50 indicate activity is expanding across the manufacturing sector, while those below 50 signal contraction.
"It seems like the equity market is now coming around to the realization that maybe this is something that may linger for some time", Wells Fargo Investment Institute senior global market strategist Sameer Samana said.
"These initial interventions aim to boost confidence, but they are unlikely to be sufficient to curtail a sharp downturn in Q1", Citi economists said in a note.
The pan-European Stoxx Europe 600 gained 0.2%.
The Bloomberg Dollar Spot Index advanced 0.2 per cent. The Nasdaq Composite also fell 148 or 1.59 percent to 9,150.94 points and the S&P 500, which closed at 3,225.52, fell 58 points or 1.77 percent. The S&P 500 index fell 0.5 per cent to 3,266 and could be headed for its first two-week losing streak since early October.
The pound slid after British Prime Minister Boris Johnson set out tough terms for European Union talks, rekindling fears Britain would reach the end of an 11-month transition period without reaching a trade deal.
The Russell 2000 index of smaller company stocks on Friday dropped 34.16 points, or 2.1 percent, to 1,614.06, plummeting 2.9 percent from a close of 1,662.23 a week earlier. Bond prices fell. The yield on the 10-year Treasury rose to 1.55%.
Benchmark U.S. crude oil rose 8 cents to $51.64 per barrel in electronic trading on the New York Mercantile Exchange. Yet, Atlanta Federal Reserve Bank President Raphael Bostic on Monday said his outlook for the USA economy was unmoved by the virus.
The April gold contract was down US$1.30 at US$1,587.90 an ounce and the March copper contract was down 0.7 of a cent at US$2.52 a pound. USA gold futures settled 0.3% lower at $1,582.40.
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