LONDON, Feb 24 (Reuters) - The U.S. 10-year Treasury yield fell to its lowest level since 2016 on Monday as the spread of coronavirus over the weekend rattled world markets, already on edge about the economic damage caused by the outbreak.

Fears are mounting that the coronavirus outbreak in China will grow into a pandemic with disruptive and deadly consequences for countries around the world, after sharp rises in infections in South Korea, Italy and Iran.

Italy raced on Sunday to contain the biggest outbreak of coronavirus in Europe, sealing off the worst affected towns and banning public events in much of the north as a third patient died of the illness.

As investors rushed for safe-haven assets, the 10-year Treasury yield fell over 5 basis points to 1.419% -- its lowest level since July 2016.

The 30-year Treasury yield touched a new record low at 1.873% and was last down 4 bps on the day. (Reporting by Dhara Ranasinghe Editing by Tommy Reggiori Wilkes)