World stock markets and oil prices tumbled Monday on growing fears of a coronavirus pandemic, with Milan and Seoul off the most as new cases spiked, while gold hit a seven-year peak on safe-haven buying, dealers said.

In afternoon trading, Milan's stock market was more than five percent lower following reports of a fifth death in Italy amid the COVID-19 epidemic.

In Lombardy, northern Italy, villages have been sealed off and security measures enforced to stem the spread of the disease.

Traders' screens flashed red elsewhere in Europe too, with Frankfurt falling 4.3 percent, London losing 3.9 percent, Madrid down 4.1 percent and Paris shedding 4.3 percent.

As trading began in New York, the Dow Jones index was off by 3.4 percent. Brent oil prices slumped 4.6 percent as the burgeoning crisis caused worries about global energy demand.

Conversely, on the London Bullion Market gold spiked to $1,689.31 per ounce, a level last seen in January 2013, before easing back to $1,684.00 as investors snapped up the precious metal as a safety measure amid the market turbulence.

'Root of the problem'

"The root of the problem is this: there is burgeoning fear that the shutdown effect that has hit China's economy is going to take over elsewhere, dealing another blow to global growth, and earnings growth prospects," said Patrick O'Hare at Briefing.com.

"Not surprisingly, the (US) Treasury market has been a beneficiary of the risk-off move in stocks. The 10-year note yield is down eight basis points to 1.39% and flirting with its all-time low yield of 1.36% seen in July 2016," he added.

US Treasury bonds are also a popular safe haven investment during economic downturn. Seoul stocks shed 3.9 percent as South Korea announced a surge in coronavirus infections, while Hong Kong erased 1.8 percent but Shanghai retreated by only 0.3 percent.

Traders last week had been broadly optimistic that the virus -- which has killed nearly 2,600 and infected 80,000 -- was being contained outside China but a spurt of infections and deaths in other countries including South Korea, Italy and Iran has fanned fears of a global outbreak.

Virus 'can spread rapidly'

"It would appear the coronavirus has finally caught up with the markets," OANDA analyst Craig Erlam told AFP. "As we saw in China, this can spread rapidly and be very difficult to contain."

Travel and tourism linked firms were particularly vulnerable, with Sydney-listed Qantas plunging more than seven percent, and Air China off by nearly six percent in Hong Kong. "One thing is very clear, travel and tourism in Asia are taking a beating," analysts at the Dutch bank ING noted.

In Europe, British low-cost airline EasyJet saw its share price crash by more than 15 percent in afternoon trading, while German flag carrier Lufthansa lost more than eight percent in Frankfurt.