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World Markets Tumble as Fears Over Virus Outbreak Spread

Markets throughout Europe and Asia, as well as the U.S., have felt the effects.

AP Photo/Vincent Yu

Shares tumbled in Europe and Asia on Thursday as the impact of the virus outbreak in China expanded to include flight cancellations and other wider precautions to help stop its spread.

Taiwan's benchmark dived 5.8 percent as its market reopened after the Lunar New Year. Shares fell in most other markets, with the CAC 40 in Paris dropping 1.1 percent to 5,890.00 and Germany's DAX shedding one percent to 13,215.90. In Britain, the FTSE 100 declined 0.9 percent to 7,415.93.

The declines looked likely to carry over into U.S. trading. The future contract for the S&P 500 lost 0.7 percent, as did the future for the Dow.

The death toll from the virus rose to 170, with 7,711 people in China and elsewhere confirmed infected, as foreign evacuees from the worst-hit region in central China began returning home under close observation.

After world health officials have expressed "great concern" that the disease is starting to spread between people outside of China, Japan's Nikkei 225 index sank 1.7 percent to 22,977.75, while Hong Kong's Hang Seng index skidded 2.6 percent to 26,449.13. In Australia, the S&P ASX/200 declined 0.3 percent to 7,008.40. South Korea's Kospi lost 1.7 percent to 2,148.00.

Shares also retreated in India and Southeast Asia. Mainland Chinese markets remained closed for the Lunar New Year holiday. "With equity markets pumped to juicy levels by the relentless flow of cheap central bank money around the world, unexpected Wuhan-like events leave them acutely vulnerable to potentially aggressive corrections," Jeffrey Halley of Oanda said in a commentary.

The World Health Organization was due to meet Thursday in Geneva to consider whether to issue a global alarm that might prompt more controls on movement inside and to and from China, resulting in greater disruptions to businesses and markets.

Overnight, stocks lost momentum on Wall Street as investors tuned in to a news conference by Federal Reserve Chairman Jerome Powell. Speaking to reporters Wednesday afternoon, Powell acknowledged that there's a risk the outbreak could slow the global economy. But stocks barely budged after the Fed announced would leave its benchmark interest rate unchanged at a low level. The move, which was widely expected, reflects the central bank's mostly positive view of the U.S. economy.

Last year, the Fed cut its benchmark interest rate three times after having raised it four times in 2018. Powell credits those rate cuts with revitalizing the housing market, which had stumbled early last year, and offsetting some of the drag from President Donald Trump's trade war with China.

Investors have been assessing quarterly reports from big companies. On Thursday, Coca-Cola, UPS, Amazon and Visa are scheduled to release results. Caterpillar and Exxon Mobil will report results on Friday.

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