GLOBAL MARKETS-Stocks slide to two-week low on China virus fears, safe havens gain

(New throughout, updates prices, market activity and comments to add U.S. market open; new byline, changes dateline; previous LONDON)

* Equity markets slump worldwide

* Safe-haven Japanese yen, Treasury notes in demand

* Many Asian markets closed for New Year holiday

NEW YORK, Jan 27 (Reuters) - Stocks markets tumbled worldwide on Monday and investors worried about the possible economic impact of the coronavirus drove up the price of safe-haven assets such as the Japanese yen and government debt.

China’s yuan tumbled to a 2020 low and commodity-linked currencies such as the Australian dollar fell on mounting concern about the coronavirus. The yen was the main beneficiary, though its move higher was limited.

Crude prices dropped below $60 a barrel for the first time in nearly three months on risk aversion, while gold prices surged 1% to nearly a three-week high.

Benchmark U.S. Treasury yields fell to three-month lows while the yield on 10-year German bunds, the euro zone benchmark, fell to its lowest in almost two months.

Key indexes for British, French and German equity markets slid more than 2%, as did pan-European markets. Stocks on Wall Street fell more than 1% as investors grew increasingly anxious.

Markets in China, Hong Kong, Taiwan, South Korea, Singapore and Australia were closed on Monday.

MSCI’s gauge of stocks across the globe shed 1.56% to a three-week low, while its emerging market index lost 1.59%.

The broad FTSEurofirst 300 index in Europe dropped 2.23 percent at 1,619.61 while the pan-European STOXX 600 index lost 2.29%.1,620.23

On Wall Street, the Dow Jones Industrial Average fell 405.73 points, or 1.4%, to 28,584, the S&P 500 lost 46.54 points, or 1.41%, to 3,248.93 and the Nasdaq Composite dropped 167.91 points, or 1.8%, to 9,147.00.

U.S. equities were overdue for a correction, said David Kelly, chief global strategist at JPMorgan Funds in New York. “We have a slow and steady economy, a giddy and fast market and eventually those two things have to meet in the middle somewhere.”

The benchmark S&P 500 rose more than 12% from the end of September to an all-time high last week.

“The market was due for a fall and coronavirus is a perfect case of an unknown unknown. An increase in uncertainty causes the market to fall but the real question here does it affect the global economy?” Kelly said, adding he did not expect it to significantly change global economic growth or corporate earnings.

China extended its Lunar New Year holiday and the Shanghai stock exchange said it will reopen Feb. 3. More big businesses in China shut down and told staff to work from home in a bid to contain the disease’s spread as the death toll rose to 81.

The Nikkei share average in Tokyo slumped 2.03%, its biggest percentage fall since August, with tourism shares hard hit.

The ability of the coronavirus to spread is getting stronger and infections could continue to rise, China’s National Health Commission said on Sunday. The total number of confirmed cases in China rose to 2,835.

Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York said investors are scared that the virus could lead to an economic slowdown but at the moment the market has overreacted.

“The market has been waiting for some sort of sell-off to develop after a roughly 30% year and for a reason for it to happen,” Pavlik said.

Oil prices fell about 2% and earlier falling more than 3%.

Brent crude slid $1.23 a barrel to $59.46, its lowest since late October and the biggest intra-day fall since Jan. 8. U.S. crude fell 96 cents to $53.23 a barrel.

U.S. Treasury prices advanced, pushing their yield lower.

Benchmark 10-year Treasury notes rose 19/32 in price to yield 1.6149%.

The benchmark 10-year Bund yield was down 5 bps to -0.414%.

In the currency market, the dollar index rose 0.12%, with the euro down 0.1% to $1.1012.

The yen strengthened 0.31% versus the greenback at 108.96 per dollar.

Spot gold rose as much as 1.0% to $1,586.425 an ounce, the highest level since Jan. 8, as the coronavirus outbreak pushed up demand for the safe-haven metal.

Reporting by Herbert Lash; Editing by David Gregorio