Stocks sank in Asia and wavered in Europe on Thursday, with sentiment clouded by China’s Covid surge. The United States has joined a growing number of countries in imposing restrictions on visitors from China after Beijing announced it would remove curbs on overseas travel as Covid cases surge.

Investors had previously cheered the easing of the nation’s strict zero-Covid controls -- which had hammered the world’s second-largest economy -- but are now worried about the impact of the outbreak on global supply chains and inflation.

Hong Kong stocks slid 0.8 percent and Tokyo lost 0.9 percent, while Sydney, Singapore, Shanghai, Taipei and Seoul also languished in the red.

Europe lapsed into negative territory at the open, before diverging as the morning progressed.

“The Covid spike (in China) looks to be impacting sentiment in markets, especially with other countries now taking action due to the scale of the surge,” Craig Erlam, analyst at trading platform OANDA, told AFP.

“There is a risk ... that the relaxation of curbs will cause some disruption and have knock-on effects elsewhere.”

Yet volumes were thin in the final trading week of the year, with investors chewing on the prospects of a recession in 2023, and how central banks -- especially the US Federal Reserve -- are going to handle the fight against rampaging inflation. “More broadly, equity markets are just drifting into the New Year and will continue to be choppy for the rest of the week in what I expect will be very thin trade,” Erlam added.

The Fed and others have repeatedly raised interest rates to put the brakes on soaring prices this year, but higher borrowing costs also slow down economic activity.

Wall Street tanked Wednesday, with the Dow losing 1.1 percent and the tech-rich Nasdaq sliding 1.4 percent, extinguishing hope of a prolonged festive rally.

World oil prices fell sharply on Thursday, with traders concerned that the new China outbreak could fuel a global resurgence of the pandemic and ravage energy demand once again.

In Europe, Germany shrugged off Russia’s ban on oil sales to countries and companies that comply with a price cap on its crude exports.

The price ceiling of $60 per barrel agreed by the European Union, G7 and Australia came into force this month in response to the Russian invasion of Ukraine.

It seeks to restrict Russia’s revenue while making sure it keeps supplying the global market.

 Copper prices slipped on Thursday as surging COVID infections in top consumer China and worries about a global recession fuelled fears of slowing demand for industrial metals.

Benchmark copper on the London Metal Exchange (LME) traded down 0.5% at $8,402 a tonne in official rings. Prices of the metal used widely in the power and construction industries touched a two-week high of $8,520 on Wednesday.

“We will be entering 2023 with markets trying to gauge the demand impact from slowing global growth. It is clear that a number of key economies will enter recession, the big question is how severe,” said ING’s head of commodities Warren Patterson.

“When you couple these concerns with the ongoing weakness in China it is likely that demand will continue to dictate price direction through the early part of 2023.”

China’s lifting of restrictions, following widespread protests against them, means COVID is spreading largely unchecked and likely infecting millions of people a day, according to some international health experts.

Clues to demand prospects for copper and other industrial metals will come from surveys of purchasing managers in China’s manufacturing sector, released over the next few days.

Technically, copper faces upside resistance around $8,510 where the 200-day moving average sits currently, while support is provided by the 21-day moving average at $8,380.

Elsewhere, lead prices rose 1.9% to $2,260 a tonne after hitting $2,302.5 on Wednesday, the highest since May 5. Worries about supplies and historically low stocks have pushed prices of the battery metal up nearly 30% since Sept. 29.

Cancelled warrants at 44% of total lead stocks at 25,150 tonnes and large holdings of warrants and cash contracts suggest stocks will fall further over coming days.

Tight lead supplies on the LME market can also be seen in the hefty premium for the cash over the three-month contract.

In other metals, aluminium gained 0.7% to $2,398 a tonne, zinc fell 0.2% t $2,998, tin slipped 0.1% to $24,700 and nickel ceded 1.3% to $30,030. European stock indexes were mixed on Thursday as global recession fears weighed on markets and soaring COVID-19 cases in China countered earlier optimism about the country dropping its strict zero-COVID policy.

China’s health system has been overwhelmed after the country reversed its lockdown and testing regimes earlier this month. The United States, India, Italy, Japan and Taiwan said they would require COVID-19 tests for travellers from China.

With markets thin, China and Hong Kong Stocks fell, and MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.7% at 1223 GMT.