Italy raced on Sunday to contain the biggest outbreak of coronavirus in Europe, sealing off the worst affected towns and banning public gatherings in much of the north as the number of those infected jumped above 100.

Authorities in the wealthy regions of Lombardy and Veneto, which are the focal point of the flare-up, ordered schools and universities to close for at least a week, shut museums and cinemas and called off the last two days of the Venice Carnival.

“As of this evening, there will be a ban on the Venice Carnival as well as on all events, including sporting ones, until March 1 inclusive,” the regional governor of Veneto, Luca Zaia, told reporters. He said Sunday's festivities in the packed lagoon city would continue to prevent any public order problems.

The number of certified cases of the illness in Lombardy rose to 90 from 54 a day earlier, while in Veneto some 25 people had come down with the virus, including two people in Venice.

Health officials reported isolated cases in the neighbouring regions of Piedmont and Emilia Romagna, saying the total number of known infections in Italy had risen to above 130. Two elderly people have died of the illness in the past 48 hours.

The regional governor of Veneto, Luca Zaia, said he had dealt with numerous natural disasters during his long career, including floods and earthquakes. “But this is the absolutely worst problem that Veneto has faced,” he told reporters.

Almost a dozen towns in Lombardy and Veneto with a combined population of some 50,000 have effectively been placed under quarantine, with locals urged to stay home and special permission needed to enter or leave the designated areas.

Lombardy is home to Italy's financial capital Milan, and together with Veneto, the two regions account for 30 per cent of national gross domestic output. Any prolonged disruption there is likely to have a serious impact on the whole economy, which is already flirting with recession.

Fashion designer Giorgio Armani has said his fashion show scheduled to take place in Milan on Sunday would go ahead, but without any press or buyers present to prevent contagion, while four Serie A soccer matches were postponed across the north.

'Patient zero'

Health authorities are struggling to work out how the outbreak started. The first cases were announced only on Friday and doctors do not know the source of the illness.

Initial suspicion in Lombardy fell on a businessman recently returned from China, the epicentre of the new virus, but he has tested negative. In Veneto, doctors tested a group of eight Chinese visitors who had been to the town that was home to the first fatality, but again, they all tested negative.

“We are (now) even more worried because if we cannot find 'patient zero' then it means the virus is even more ubiquitous than we thought,” Zaia said.

Prior to Friday, Italy had reported just three cases of the virus — all of whom had recently arrived from the Chinese city of Wuhan, where the virus first emerged last year.

After the first confirmed cases, Italy suspended all direct flights to and from China but did not keep tabs on those arriving from second countries.

Italy's far-right opposition League party has demanded that the government reintroduce border controls to try to prevent new arrivals, but Prime Minister Giuseppe Conte has rejected this.

Austria's Interior Minister Karl Nehammer said on Sunday that officials would meet on Monday to discuss whether Austria should unilaterally re-establish border controls with Italy.