Currency traders watch monitors at the foreign exchange dealing room in Seoul, South Korea, on Thursday. AP

Investor nerves over the spread of a deadly new virus from China hammered Asian equities and oil benchmarks on Thursday, as authorities moved to contain the disease.

China locks down city at centre of virus outbreak

Xi says new virus must be resolutely contained

More than 570 people have been infected with the coronavirus across China and Wuhan, the city at the centre of the outbreak, has been placed under effective quarantine.

Shanghai tumbled 2.8 percent in the final day of trading before a weeklong market holiday for the Lunar New Year, when hundreds of millions of people travel across China -- raising fears of the contagion spreading further.

Currency traders watch monitors at the foreign exchange dealing room in Seoul, South Korea, on Thursday. AP

It was the biggest pre-Lunar New Year fall on record for the bourse.

Hong Kong slightly pared losses to finish down 1.5 percent while Tokyo was 1.0 percent lower.

OANDA senior market analyst Jeffrey Halley said it was "quite understandable that some money would be taken off the table until the true extent of the coronavirus issue becomes obvious".

The virus has caused alarm because of its similarity to SARS (Severe Acute Respiratory Syndrome), which killed hundreds of people in 2002-2003.

"China's importance in the overall global supply chain and the fact they are a huge export market for many countries... opens up a more unfavourable global outcome this time around," Stephen Innes, chief market strategist of AxiCorp, said in a note.

This photo taken shows medical staff members wearing protective suits at the Zhongnan hospital in Wuhan, China. AFP

Oil prices were hit hard in overnight trade with both major indexes down by more than 1.3 percent.

"Given the importance of China for oil demand and having the outbreak falling on the cusp of peak domestic travel season, the timing is particularly damaging," Innes said.

The World Health Organization has so far demurred from declaring a global health emergency -- a rare instrument used only for the worst outbreaks.

China had taken "very, very strong measures" to contain the outbreak, WHO chief Tedros Adhanom Ghebreyesus said on Wednesday.

Li Shiyu, managing director at Guangdong Xiaoyu Investment Management, told Bloomberg News that a turnaround in sentiment would depend on the number of new cases in coming weeks.

"The epidemic may reach a peak in two weeks and hopefully start to slow," he said.

"If there is a trend for new cases to decline, I would consider buying shares again."