Asian shares slide as the brand new COVID-19 pressure darkens prospects for a rebound

© Reuters. Individuals wearing protective face masks after a coronavirus outbreak appear on a Nikkei index screen in front of a realtor in Tokyo

By Kane Wu and John McCrank

HONG KONG / NEW YORK (Reuters) -Asian stocks fell on Tuesday, extending the retreat from last week's multi-year highs amid renewed fears that a highly infectious new COVID-19 strain that shut down much of the UK is slowing global development could economic recovery.

Australia increased losses by 0.67%. 225 slipped 0.85%.

The MSCI reading for stocks in Asia Pacific outside Japan fell 0.21%. China's benchmark index CSI300 and both were down 0.2%.

"An escalation in European COVID-19 restrictions in response to fears about a new variant expected to spread faster should and of course have sparked a negative reaction in prices about the short-term impact on global growth." said Stephen Innes, Chief Global Market Strategist at Axi.

"The illiquid conditions will persist through the end of the year, but such drops may be more of an opportunity to fade than anything else," he said.

Countries around the world closed their borders with the UK on Monday, fearing a new strain of coronavirus could be up to 70% more transmissible than the original, creating travel chaos and increasing the prospect of food shortages days before the UK enters the European Leave the union.

The discovery of the new strain just months before vaccines are expected to be widely available sparked renewed fears about the virus, which killed around 1.7 million people worldwide. As a result, European stocks fell on Monday in their worst session in nearly two months.

Oil prices fell on expectations of lower demand, declining 0.33% to $ 47.81 a barrel and falling 0.2% to $ 50.81.

US stocks trimmed much of their early losses during a volatile session on Monday in hopes that a long-awaited stimulus package approved by Congress leaders will help fuel a stronger rebound.

That ended the day by 0.39% to 3,694.92.

Volatility in US stocks increased in Thin Holiday trading. The Cboe Volatility Index, known as Wall Street's "fear measure", posted its largest daily gain since late October, despite finishing well from its session high.

rose 0.3% to $ 1,881.7 an ounce, with the safe haven asset hitting a monthly high at the start of the session.

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