Investor nerves over the spread of a deadly new virus from China hammered equities and oil benchmarks on Thursday, as authorities moved to contain the disease, while losses for European stock markets were less sharp awaiting the outcome of an ECB interest-rates meeting.

“Traders are cutting their exposure to stocks for fear the health crisis will spread,” said David Madden, market analyst at CMC Markets UK.

China on Thursday locked down three major cities in a province at the centre of a deadly virus outbreak, banning planes and trains from leaving in an unprecedented move aimed at containing the disease that has spread to other countries.

The respiratory virus has claimed 17 lives since emerging from a seafood and animal market in Wuhan, infected hundreds of other people nationwide and been detected as far away as the United States.

Shanghai’s stock market tumbled 2.8 per cent in the final day of trading before a week-long market holiday for the Lunar New Year, when hundreds of millions of people travel across China − raising fears of the contagion spreading further.

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

Hong Kong lost 1.5 per cent and Tokyo 1.0 per cent.

In Europe, London’s benchmark FTSE, Frankfurt’s DAX 30 and the Paris CAC-40 were all off around half of one per cent less than two hours from the close.  Wall Street Stocks dropped early on Thursday on worries that the coronavirus will crimp growth in China as major companies reported mixed earnings.

Briefing.com analyst Patrick O’Hare said there are also fears the virus will spread to other Asian countries and cause economic damage.

Singaporean authorities on Thursday confirmed that country’s first case.

“At this juncture, it would have to be labeled an exaggerated fear but worries tend to get exaggerated and investor psychology tends to get rattled more easily in markets trading at a high valuation,” O’Hare said.

About 35 minutes into trading, the Dow Jones Industrial Average was at 29,065.95, down 0.4 per cent.

The broad-based S&P 500 dipped 0.6 percent to 3,311.23, while the tech-rich Nasdaq Composite Index slipped 0.2 per cent to 9,366.53.

Among companies reporting results, Procter & Gamble edged up 0.3 per cent after reporting better-than-expected profits despite slowing revenue growth.

The consumer products giant pointed to broad-based sales growth, including in its struggling grooming unit.

Among other companies reporting results, American Airlines fell 2.5 per cent, Texas Instruments dropped 2.2 per cent and Union Pacific rose 1.5 per cent.

Meanwhile, the number of Americans filing for unemployment benefits increased less than expected last week, suggesting the labour market continues to tighten even as job growth is slowing.

Initial claims for state unemployment benefits rose 6,000 to a seasonally adjusted 211,000 for the week ended Jan. 18, the Labor Department said on Thursday. Claims had declined for five straight weeks, resulting in the unwinding of the surge seen in early December, which was blamed on a later-than-normal Thanksgiving Day.

Claims data for the prior week was revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had forecast claims increasing to 215,000 in the latest week.

Oil prices fell on Thursday on concern that the spread of a respiratory virus from China could lower fuel demand if it stunts economic growth in an echo of the SARS epidemic nearly 20 years ago.

Brent crude futures were down $1.59, or 2.5%, at $61.62 a barrel by 1426 GMT, having touched their lowest since Dec. 4. They lost 2.1% in the previous session.

US West Texas Intermediate futures fell $1.58, or 2.8%, to $55.85 after falling to their lowest since November. The contract declined 2.7% on Wednesday.

“Fundamentals are really being driven by virus fears. On a technical basis, there’s been a fight over the past six sessions but oil finally broke the 200-day moving average when it closed below that level yesterday,” said Olivier Jakob, of consultancy Petromatrix.

With coronavirus cases detected as far as away as the United States, global stock markets also felt the effects of fears that the virus could spread further as millions of Chinese prepare to travel for the Lunar New Year.

“We estimate a price shock of up to $5 (a barrel) if the crisis develops into a SARS-style epidemic,” JPM Commodities Research said in a note, citing historical oil price movements.

The US bank maintained its forecast for Brent to average $67 a barrel in the first quarter and $64.50 throughout 2020.

Amid all the demand concerns, however, supply remains plentiful. The International Energy Agency (IEA) said this week that it expects a surplus of 1 million barrels per day in the first half of the year.

The market was eagerly awaiting data from the US Energy Information Administration to confirm a rise in crude stocks after the American Petroleum Institute surprised the market by noting an increase of 1.6 million barrels last week.

Agencies