** At the midday break, the Shanghai Composite index was down 2% to 2,970.63, while the blue-chip CSI300 index <.CSI300> fell 1.6%. Earlier in the session, both indexes dropped nearly 3%, their biggest intraday percentage fall since Feb. 3.

** CSI300's financial sector sub-index <.CSI300FS> fell 1.4%, the consumer staples sector <.CSI000912> lost 0.9%, the real estate index <.CSI000952> edged up 0.1% and healthcare shares <.CSI300HC> fell 0.2%.

** Chinese H-shares listed in Hong Kong fell 0.3%, while the Hang Seng was down 0.1% to 26,799.14.

** The smaller Shenzhen index and the start-up board ChiNext Composite index were both weaker by about 2%. The start-up board tanked as much as 4.1%.

** The virus death toll climbed to seven in Italy on Monday and several Middle East countries were dealing with their first infections.

** The surge of cases outside mainland China triggered sharp falls in global markets as investors fled to safe havens. On Monday, European equity markets suffered their biggest slump since mid-2016, gold soared to a seven-year high and oil tumbled 4%.

** The Dow Jones Industrials and S&P 500 posted their biggest one-day percentage drops in over two years and Nasdaq had one of its worst days since December 2018. [.N]

** A-shares are not immune to this shock in global markets, Guosheng Securities said in report. The outbreak within China will also hurt domestic economic growth and corporate earnings, AJ Securities noted in a report.

** China reported a rise in new virus cases in Hubei, the epicentre of the outbreak, on Tuesday, while the rest of the country saw a fourth-straight day of declines.

** Around the region, MSCI's Asia ex-Japan stock index <.MIAPJ0000PUS> edged down 0.1%, while Japan's Nikkei index <.N225> dropped 3.3%.

** The yuan was 0.21% stronger at 7.0132 per U.S. dollar at 0342 GMT.

** The largest percentage losers in the Shanghai index were Jiangsu Boxin Investing & Holdings Co Ltd, down 10%, followed by Lushang Health Industry Development Co Ltd, losing 9.1%, and Hangzhou Silan Microelectronics Co Ltd, down by 8.5%.

** As of 0343 GMT, China's A-shares were trading at a premium of 27.16% over the Hong Kong-listed H-shares.

** The Shanghai stock index is below its 50-day moving average and above its 200-day moving average.

(Reporting by Luoyan Liu and Noah Sin; Editing by Subhranshu Sahu)