By Chong Koh Ping and Anna Isaac 

Global stocks and the price of oil fell sharply Monday, spurred by the emergence of fresh coronavirus outbreaks outside China. The Dow Jones Industrial Average tumbled about 900 points at the open in New York, following steep drops in European and Asian equity markets.

The S&P 500 and the Nasdaq Composite also fell sharply. Earlier, the Stoxx Europe 600 index retreated 3.5% in its biggest drop since 2016. The main equity gauge in Italy, which has the biggest coronavirus outbreak outside Asia, fell 4.7%. Brent crude, the global oil benchmark, tumbled roughly 4% in its sharpest drop in almost five months.

The Group of 20 major economies warned Sunday that viral outbreak poses a serious risk to the global economy as new cases flared outside of China, prompting concerns about dangerous new pockets of infection in places as far as Iran and Italy.

The contagion, which has curtailed Chinese manufacturing, exports and consumption this year, is threatening to dampen global growth as factories world-wide depend on a supply chain tethered to China for many intermediate and finished goods. Officials and economists are warning that an extended Chinese shutdown could cripple global manufacturing and cost the world up to $1 trillion in lost output.

"Not only are Chinese industrial hubs in lockdown, and derailing global supply chains, you now have the virus spreading very close to industrial hubs in Europe," said Florian Hense, European economist at Berenberg Bank.

In Italy, more than 50,000 people weren't allowed to leave their towns under a quarantine in effect Sunday. The outbreak's epicenter within the country is just miles from Milan, the engine of Italy's economy, and led to trade shows, soccer matches and other public events being canceled.

"Northern Italy, Switzerland, Southern Germany, and Austria form a big supranational industrial hub," Mr. Hense said. "Should a lockdown in small areas of Italy be widened, there would be far more significant disruption for manufactures like German car makers in Europe."

Germany's DAX, the benchmark for Europe's industrial powerhouse, tumbled 3.7%.

Airlines and travel-related stocks were hit particularly hard. The travel and tourism segment of the Stoxx Europe 600, which includes major hotel chains and airlines, dropped 5.7%. Short-haul budget airline easyJet dropped 15%, leading the losers among London-listed stocks and British Airways parent company International Consolidated Airlines fell 8.6%. Paris-listed plane-maker Safran fell 1.2% while aircraft engine-maker Rolls-Royce declined 2.7%.

Ahead of the opening bell in New York, Delta Air Lines fell 5%, United Airlines Holdings slipped 2.4% and American Airlines Group dropped 4.9%.

In South Korea, which reported its seventh death from the coronavirus, the benchmark Korea Composite Stock Price Index, or Kospi, closed down 3.9%. That was its biggest one-day fall since 2018, according to FactSet. South Korea on Sunday raised its infectious-disease alert to red -- the highest level -- for the first time since the H1N1 swine flu outbreak in 2009.

"This could serve as a 'wake-up' call for Japan and other Asian economies, which are vulnerable against the impact of the virus," said CMC Markets analyst Margaret Yang. "This will also put the hosting of Tokyo Summer Olympic Games under scrutiny, as Japan now has the highest number of infections outside of China alongside an aging population."

Elsewhere in Asia, stock benchmarks in Hong Kong and Singapore fell 1.8% and 1.2%, respectively.

In Australia the S&P/ASX 200 index declined 2.3%. Markets in Japan were closed Monday.

Brent crude futures dropped to $55.74. Oil prices have declined in recent weeks on investors' concerns that the viral outbreak would sap demand for crude. Saudi Arabia is also considering a break from its four-year oil-production alliance with Russia, The Wall Street Journal reported Friday.

Investors fled to haven assets, leading to gold jumping 2% to more than $1,682 an ounce on Monday, its highest in seven years. Increased demand for U.S. Treasurys pushed yields, which move inversely to prices, on the 10-year note down to 1.397% from 1.644% Friday.

"The rally of haven assets such as gold reflects surging demand for safety during a time of uncertainty. Things will probably get worse before it gets better," said Ms. Yang.

Write to Anna Isaac at anna.isaac@wsj.com

(END) Dow Jones Newswires

February 24, 2020 09:47 ET (14:47 GMT)

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