Asian shares pared early losses on Monday as Chinese authorities lifted some coronavirus-related restrictions on work and travel, helping businesses resume work though overall sentiment was still jittery as the death toll from the epidemic climbed.
More than 900 people have so far died in China's central Hubei province as of Sunday with most of the new deaths in the provincial capital of Wuhan, the epicenter of the outbreak.
To contain the spread, China's government had ordered lockdowns, cancelled flights and shut schools in many cities. But on Monday, workers began trickling back to offices and factories though a large number of workplaces remain closed and many white-collar workers will continue to work from home.
MSCI's broadest index of Asia-Pacific shares outside Japan reversed some of its early losses to be down 0.5%. Japan's Nikkei was off 0.4%, after earlier stumbling more than 0.8% while Australia's benchmark index was down a tad.
China's indexes were the only ones in the black in Asia with the blue-chip index adding 0.4% and Shanghai's SSE Composite up 0.3%.
"Markets have turned around a bit reflecting the news that Chinese businesses were returning to work," said James McGlew, analyst at stockbroker Argonaut.
"Overall, I think, there is still a concern out there that the impact from the coronavirus hasn't been fully quantified," he added.
"Today's (easing of restrictions) seems to be more of a symbolic gesture rather than the government actually being on top of the situation with this virus."
The outbreak has killed more people than the SARS epidemic did globally in 2002/2003. The virus has also spread to at least 27 countries and territories, infecting more than 330 people.
Monday's losses in Asia extended from Wall Street on Friday where the Dow fell 0.9%, the S&P 500 declined 0.5% while the Nasdaq dropped 0.5%. E-mini futures for S&P 500 reversed early losses on Monday to be up 0.1%.
"Expect markets to be sensitive to virus headlines. In this environment, we favour defensive positioning," ANZ economists wrote in a note.
China's central bank has taken a raft of measures to support the economy, including reducing interest rates and flushing the market with liquidity. From Monday, it will provide special funds for banks to re-lend to businesses working to combat the virus.
Despite the measures, analysts expect the world economy to take a hit from an expected slowdown in China.
"For now, our best guess is that the economic disruption related to the coronavirus will cost the world economy over $280 billion in the first quarter of this year," Capital Economics said in a note on Friday.
"If we're right, then this will mean that global (economic output) will not grow in q/q terms for the first time since 2009,” it said.
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