About $130 billion has been wiped off the value of Australian shares after US President Donald Trump announced a temporary ban on travellers from Europe and the World Health Organisation declared the coronavirus a pandemic.

Key points: The rising cost of coronavirus and the share market crash has banks and government looking at stimulus measures

The rising cost of coronavirus and the share market crash has banks and government looking at stimulus measures Despite the UK Government announcing a stimulus plan, the European markets fell deeper into the red

Despite the UK Government announcing a stimulus plan, the European markets fell deeper into the red The Australian dollar dipped again to around 64.58 US cents

The ASX 200 index fell nearly 8 per cent at its low point — the worst one-day fall since the collapse of US investment bank Lehman Brothers triggered losses in October 2008.

It closed down 7.4 per cent, or 421 points, to 5,305, with consumer stocks, oil stocks, banks and miners leading the falls.

The All Ordinaries index lost 7.2 per cent or 418 points to 5,371.

The Australian dollar was down 0.5 per cent to 64.55 US cents.

The sell-off was initially sparked after the World Health Organisation declared the coronavirus outbreak a pandemic.

The Federal Government's $17.6 billion stimulus plan also failed to lift the market.

The ASX 200 has now lost about one-quarter of its value — more than half a trillion dollars — since its record high of 7,197 points just three weeks ago.

Travel related firms were some of the biggest losers with Qantas down 9.9 per cent to $3.64, Flight Centre down 18.2 per cent to $19.61 and Webjet down 19.7 per cent to $5.56.

Only construction firm, Cimic, and x-ray firm, Pro Medicus, rose among the top 200 companies.

It was a sea of red in Asia as well, with the Nikkei 225 falling 4 per cent to 18,644.

'We are in danger of a crash'

CMC Markets chief strategist Michael McCarthy said it was possible the coronavirus sell-off could rival the market losses seen during the global financial crisis in 2008-2009.

"The reality is no-one knows," he said.

"We simply don't know how far this virus will spread and what the economic impacts will be."

It was, therefore, impossible to predict the bottom in the current slide in the market.

"We're in danger here of heading towards a crash," Mr McCarthy said.

"Unless we see either a peak in infections or a comprehensive or coordinated response from governments around the world, it looks like pressure shares could continue."

Asian shares were also caught up in the sell-off.

The Shanghai Composite lost 1.3 per cent and the Hang Seng in Hong Kong declined 3.6 per cent. South Korea's KOSPI index fell 4.8 per cent.

US stock futures tumbled 4.7 per cent to 2,610 points, near the daily downward limit, on the European travel ban and because investors were disappointed with Mr Trump's stimulus plans.

US stocks plunged into bear market

Overnight, the Dow Jones Industrial Average had fallen 1,465 points or 5.85 per cent to 23,553, the S&P 500 lost 141 points or 4.89 per cent to 2,742 and the Nasdaq Composite dropped 392 points or 4.7 per cent to 7,952.

That means it has now fallen one fifth from last month's record high, making it a bear market — a sign of a recession.

The US Federal Reserve has again increased the amount of money it is providing to banks for overnight borrowing to $US175 billion ($270 billion).

The Bank of England cut its benchmark interest rate by 50 basis points to 0.25 per cent, and the UK Government announced a 30 billion pound ($59 billion) stimulus plan.

Despite that news, European markets fell deeper into the red.

The FTSE 100 index in London fell 1.4 per cent or 84 points to 5,877, although the benchmark Italian index rose 0.3 per cent.

The oil price war has escalated, with Saudi Arabia and the United Arab Emirates promising to increase production.

Brent crude had dropped 4.2 per cent to $US35.66 a barrel, while spot gold fell to $US1,640 an ounce.

Gold miners were lower because of a fall in the gold price overnight.