Tourism-linked stocks sank in Hong Kong on Tuesday with investors spooked by confirmation that a deadly virus in China can be transmitted between humans, while confidence was also hit by Moody's decision to downgrade the city's credit rating.

The Hang Seng Index has enjoyed a healthy run-up over the past six weeks, thanks to the China-US trade pact, signs of an improving global outlook and looser central bank monetary policies.

But the optimism has given way to fears about an outbreak of a virus that resembles SARS, a disease that killed hundreds in China and Hong Kong and hammered the local equities market.

Airlines were among the worst hit stocks. Cathay plunged more than four percent and Air China tumbled nearly six percent. Casino operators, who rely on tourism, were also sharply lower. Wynn Macau shed 4.8 percent and Galaxy Entertainment was off 3.6 percent.

The Hang Seng Index sank 2.8 percent and was taking a hit across the board after Moody's said it had lowered its credit rating in a fresh blow to the financial hub, which likely fell into recession last year owing to months of demonstrations as well as the China-US trade war.

The new coronavirus strain, which has spread from the mainland city of Wuhan, has infected more than 200 people. On Tuesday authorities said a fourth person had died from it.