Shares drop, gold surges as coronavirus fears trigger flight for safety

Global shares extended losses on Monday while safe-haven gold soared as the spread of the coronavirus outside China accelerated with infections jumping in South Korea, Italy and the Middle East, in a worrying new development in the outbreak.

In a sign of panic, E-minis for the S&P500 dropped 1% in early Asian trades while Nikkei futures slipped more than 1% too.

Australia's benchmark index slid 1.6% while New Zealand was down about 1%. South Korea's KOSPI index fell 2.2%.

That left MSCI's broadest index of Asia-Pacific shares outside Japan off 0.7% to 541.48, the lowest since Feb. 5. Japanese markets were closed for a public holiday.

"It promises to be an interesting session here in Asia, with the bears back wrestling a bit more of a say here, and gold and bond bulls feeling pretty good about their exposures," said Chris Weston, head of research at broker Pepperstone.

"The news flow from the weekend has changed the game somewhat, where the focus is much more on the threat of an outbreak outside of China."

The virus has killed 2,442 people in China, which has reported 76,936 cases, and slammed the brakes on the world's second largest economy.

It has spread to some 28 other countries and territories, with a death toll of around two dozen, according to a Reuters tally.

Investors fretted over the mounting economic toll from the virus, betting on more monetary policy action from central banks. In response, US Fed fund futures surged signaling more rate cuts later this year.

While markets had largely brushed aside fears of long-term economic damage from the virus, a steady drip of new cases in countries beyond China has kept concerns alive.

On Friday, US stocks were beaten down by concerns about the virus and after data showed American business activity stalled in February, signaling a contraction for the first time since 2016.

US chipmakers fell sharply last week as a flash reading of the IHS Markit services sector Purchasing Managers' Index dropped to its lowest level since October 2013. The manufacturing sector also clocked its lowest reading since August.

The dollar fell for a second straight session on Monday against the yen to be last at 111.48.

The Australian dollar, considered a liquid proxy for China plays, was down 0.4% as it languished near an 11-year low.

The euro eased a tad to $1.0836.

That left the dollar index slightly higher at 99.430.

Analysts expect the Korean won to slump against the dollar as one of the favorite risk proxies for investors.

The won has fallen more than 4.5% on the dollar so far this year. It was last unchanged at 1,206.87.