The new coronavirus has peaked in China but could still grow into a pandemic, the World Health Organisation warned, as infections mushroom in other countries.

Financial markets have gone into a tailspin after grim news of deaths and outbreaks in the Middle East, Europe and Asia, even as the Chinese epicentre appeared to be calming, with the death toll at its lowest for almost three weeks.

But the situation is worsening in other countries, with more than 2,000 cases and around 30 deaths reported abroad, prompting a raft of restrictions on travellers from infected nations.

South Korea, Italy and Iran have logged particularly sharp increases in infections and deaths, while several countries in the Middle East reported their first cases of the novel coronavirus.

But WHO chief Tedros Adhanom Ghebreyesus insisted the virus could still be contained, praising China's drastic quarantine measures in several cities for helping to prevent an even bigger spread.

"For the moment we are not witnessing the uncontained global spread of this virus and we are not witnessing large-scale deaths," Tedros told reporters in Geneva on Monday.

He added, however, that countries should be "doing everything we can to prepare for a potential pandemic".

The term "pandemic" is used to describe an illness that spreads across numerous communities.

The White House plans to spend $2.5billion to combat the epidemic, according to US media. There are 53 cases in the United States so far.

South Korea hotspot

South Korea, which has the largest number of cases outside China, reported 60 more infections and one more fatality on Tuesday, raising its death toll to eight and total patients to nearly 900.

South Korea's outbreak has centred around a religious sect in Daegu, the country's fourth largest city.

The country is on its highest "red" alert. As part of the containment efforts, school holidays were extended nationally while the 2.5 million people of Daegu were told to remain indoors.

The United States and South Korea may scale back a spring military drill because of the outbreak.

The US Centers for Disease Control raised its caution level to warn Americans against "all nonessential travel to South Korea".

Italy, which has reported seven deaths and over 200 cases, has locked down 11 towns, while upcoming football matches in its Serie A and the Europa League will be played behind closed doors.

With police manning checkpoints to enforce a blockade, Prime Minister Giuseppe Conte has said that residents could face weeks of lockdown.

Production of the latest film in the "Mission: Impossible" series starring Tom Cruise has been stopped before it was scheduled to shoot in Venice.

In Japan, a fourth former passenger of the coronavirus-stricken Diamond Princess cruise ship died, according to local media. The man was in his 80s.

Iran fears

The disease — officially known as COVID-19 — spread to new countries including Afghanistan, Bahrain, Iraq, Kuwait and Oman.

Two more Iranians infected with a coronavirus have died, media website Eghtesaonline said on Tuesday, taking the toll in the Islamic Republic to 14, which has the highest tally of deaths outside China, where the virus emerged late last year.

"Tests showed they had the new coronavirus," the head of the Medical Science University of Saveh said, according to the website.

The semi-official ILNA news agency quoted one local lawmaker in hard-hit Qom — a religious centre — who said 50 people had died there.

The Iranian government denied the report, and pledged transparency.

Even so, authorities have only reported 64 infections in Iran, an unusually small number that would mean an extremely high mortality rate.

Michael Ryan, head of WHO's health emergencies programme, said a team from the UN agency would arrive in Iran on Tuesday.

Several countries have taken measures to prevent arrivals from Iran.

China peak

In China, 508 new cases were reported, with all but nine at the epicentre in central Hubei province.

Although that was up from 409 on Monday it was much lower than new infections being reported just a week ago.

China's death toll reached 2,663 on Tuesday, after 71 more people died.

Reassured by the official numbers, the country is gingerly getting back to business.

Beijing is seeing more cars on the street, factories are resuming work, Apple is reopening several of its stores, and some regions are relaxing traffic restrictions.

But schools remain closed, Beijing has a mandatory 14-day quarantine for people returning to the capital, and authorities are keeping some 56 million in Hubei and its capital under lockdown.

On Monday China declared an immediate and "comprehensive" ban on the trade and consumption of wild animals, a practice believed responsible for the coronavirus outbreak.

WHO's Tedros said the epidemic peaked in China between January 23 and February 2.

Bruce Aylward, leader of a WHO mission of international experts, said late Monday it was time for China to start lifting some of the restrictions.

"Obviously they want to get society back to a more normal semblance of what probably is the new normal, because this virus may be around [...] for months," Aylward said.

Reflecting the disquiet, global markets plunged on Monday, with Wall Street off 3.6 per cent.

Bargain buying helped some Asian markets into the green on Tuesday, but disquiet remained, with Tokyo closing down more than 3pc.