Markets across the globe were in freefall today as a surge in coronavirus cases in Italy, South Korea and across the Middle East spooked investors.
The sell-off was sparked by concerns that the virus could become a pandemic and that no vaccine is available.
The heightened tensions sent panic across trading floors. The FTSE 100 plunged nearly 3%, or 200.44 points, to 7200.99. The dollar and gold surged as investors sought safe havens.
In Europe, northern Italy has become the focus for medics after the country imposed strict quarantine restrictions in regions close to Milan and Venice.
The country is the fourth-largest economy in Europe and has by far the highest number of coronavirus cases with 152. Four people have died.
On the Continent, the Cac40 in France dived 4%, while in Germany the Dax lost 3% and in Italy the Borsa Italiana also fell, down 4%.
The picture was equally grim in Asia. Seoul’s Kospi fell 3.9%, its worst day since late 2018.
Adam Pollock, head of corporate broking at WH Ireland, said: “I haven’t seen the market this red for a long time… there’ll definitely be a hit to [Chinese] GDP.”
Airline stocks were among the biggest fallers amid worries that global travel could dry up as countries impose strict travel restrictions, resulting in more business conferences and holidays being cancelled. Budget carrier easyJet slumped to the foot of the blue-chip index, down 10%, or 155p, to 1353p, and British Airways owner IAG was off 7%, or 42p, to 580p.
Travel company Tui tumbled 9%, or 76p, to 775p.
Miners and oilers were also in reverse as economists pencilled in a severe economic slowdown in China for the first six months this year. Brent crude fell 2.8% to $56.89 a barrel.
Primark owner Associated British Foods was the only UK company to formally address the situation.
The fast fashion retailer said it would suffer supply shortages if delays in factory production in China are prolonged. The shares tumbled 2% to 2540p.
Investors ditched equities and instead fled to safe-haven assets like gold and US government bonds.
The 10-year Treasury yield, which moves inversely to price, fell nine basis points to 1.38%, the lowest level since July 2016.
Gold rallied 1.5% to $1,667 a troy ounce, lifting the yellow metal’s price to the highest level in seven years.
As a result the only notable risers on the FTSE were Polymetal, which added 16.5p to 1360p, and Fresnillo, which climbed 18p to 730p.
Robert Carnell, chief Asia-Pacific economist at ING, said: “Markets are likely to show extreme caution in the face of the global spread of the coronavirus - this is no longer solely an Asia issue.”