Shanghai equities plunged almost eight percent Monday as nervous traders returning from an extended Lunar New Year break finally weighed in on a public health crisis that has slowed the Chinese economy and roiled international stock markets.
Oil prices also suffered a big drop, while equity markets in New York and Europe recovered some of their losses from Friday's rout.
Investors remained fixated on the coronavirus, which has afflicted more than 17,000 people in China and 150 beyond the country.
China's elite Politburo Standing Committee called for improvements to the "national emergency management system" following "shortcoming and difficulties exposed in the response to the epidemic," according to the official Xinhua news agency.
Brent crude -- the benchmark international oil contract -- fell by more than three percent to under $55 per barrel on expectations that demand could slide as the virus hits economic output.
The main US oil contract, WTI, was also briefly under $50 per barrel.
"Traders are fearful that China's demand for the energy will tumble," said analyst David Madden at CMC Markets UK.
OPEC members and their ally Russia will convene a technical meeting this week to analyze falls in the oil price since the outbreak of a coronavirus epidemic, a source close to the cartel said on Sunday.
The drop in oil prices followed a bruising session in Shanghai, which was closed for more than a week for New Year's festivities during which global markets were rocked by the growing coronavirus outbreak.
Fifty-seven new deaths were confirmed on Monday -- the single-biggest daily increase since the virus was detected late last year in the central city of Wuhan.
But US stocks finished solidly higher after bourses in London, Paris and Frankfurt all pushed higher.
In foreign exchange, sterling slid more than 1.5 percent versus the dollar, hit by worries over post-Brexit trade deal negotiations after Britain's exit from the European Union last Friday, dealers said.
The tumble in the pound helped to lift London's benchmark FTSE 100 index.
Sterling's slide is "generally good for companies whose shares are priced in pounds but who earn in foreign currencies including the dollar," noted Russ Mould, investment director at AJ Bell.
Among individual companies, Tesla continued to rocket higher following a strong earnings report last week. Shares soared almost 20 percent and have more than tripled since October.
Exxon Mobil dropped 2.2 percent as Goldman Sachs downgraded the oil giant on expectations that returns will lag the company's targets. Goldman also said Exxon has an "elevated" valuations compared with peers.
- Key figures around 2140 GMT -
New York - DOW: UP 0.5 percent at 28,399.81 (close)
New York - S&P 500: UP 0.7 percent at 3,248.92 (close)
New York - Nasdaq: UP 1.3 percent at 9,273.40 (close)
London - FTSE 100: UP 0.6 percent at 7,326.31 (close)
Frankfurt - DAX 30: UP 0.5 percent at 13,045.19 (close)
Paris - CAC 40: UP 0.5 percent at 5,832.51 (close)
EURO STOXX 50: UP 0.6 percent at 3,661.86 (close)
Shanghai - Composite: DOWN 7.7 percent at 2,746.61 (close)
Hong Kong - Hang Seng: UP 0.2 percent at 26,356.98 (close)
Tokyo - Nikkei 225: DOWN 1.0 percent at 22,971.94. (close)
Pound/dollar: DOWN at $1.2996 from $1.3206 Friday
Euro/pound: UP at 85.09 pence from 83.99 pence
Euro/dollar: DOWN at $1.1060 from $1.1093
Dollar/yen: UP at 108.68 from 108.35
Brent Crude: DOWN 3.8 percent at $54.45 per barrel
West Texas Intermediate: DOWN 2.8 percent at $50.11 per barrel
Investors are concerned that measures to stem the spread of the coronavirus will disrupt the world economy