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Global stocks and oil tumble on new coronavirus fears after new variant found

Stocks, Treasury yields and oil sank in early trading Friday while the yen jumped as a new Covid-19 strain discovered in southern Africa sent a chill across global markets.

An Asia-Pacific equity gauge was set for the worst slide since March, with Japan and Hong Kong underperforming and travel shares among the biggest decliners. U.S. and European futures fell and the 10-year Treasury yield dropped to 1.56%.

The World Health Organization and scientists in South Africa are studying the recently identified variant described as very different to previous versions and of serious concern.

The U.K. and Israel banned flights from South Africa and some neighboring countries. Hong Kong confirmed two cases of the strain.

Brent oil slumped as increasing coronavirus cases and a new Covid-19 strain raised concerns about the outlook for energy demand ahead of next week’s OPEC+ meeting on production policy.

Read also: The US hints at suppression of global oil prices

Futures in London slid toward $80 a barrel as crude was swept up in a wave of caution across global markets. Virus cases are climbing in Europe and the U.S., while U.K. authorities will temporarily ban flights from some southern African countries and put travelers in quarantine over worries about the new strain.

“The new Covid variant found in South Africa is ringing fresh alarm bells,” said Vandana Hari, founder of Vanda Insights in Singapore. “I expect OPEC+ to stay the course on its tapering strategy but if the new variant emerges as a major problem in the coming days, it may end up pausing the monthly increments.”

OPEC+ meets Dec. 2 to decide production policy for January following the unprecedented move by the U.S. and other nations to tap strategic stockpiles to tame rising energy prices.

While delegates from the cartel have signaled that supply might have to be held back, Citigroup Inc. said reducing quotas would erode the group’s claim of providing public good by stabilizing markets.

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