Oil slide roils emerging markets, stocks fall anew – Reuters

By Herbert Lash

NEW YORK Tue Dec 16, 2014 1:43am IST

The New York Stock Exchange shortly after the market's opening bell in New York October 31, 2014. REUTERS/Lucas Jackson

1 of 3. The New York Stock Exchange shortly after the market’s opening bell in New York October 31, 2014.

Credit: Reuters/Lucas Jackson

NEW YORK (Reuters) – Oil prices plumbed 5-1/2-year lows on Monday, pulling down emerging market assets and boosting demand for the safe-haven yen, while global equity markets slipped further after last week’s rout amid nagging worries about worldwide growth.

Stocks retreated as crude oil prices gave up early gains after the Organization of the Petroleum Exporting Countries restated its determination not to cut output despite a global energy glut.

Major European stock indexes fell more than 2 percent, while the Dow and S&P 500 fell about 1 percent before paring losses in choppy trade.

The ruble RUB= hit record lows and Russian assets plunged on concern about possible new U.S. sanctions over Ukraine, weak oil prices and one-sided bets that the currency would extend its slide.

The yield rise on U.S. Treasuries was limited by persistent concerns about weakening growth and inflation globally. U.S. stocks dipped even as U.S. manufacturing output posted its biggest gain in nine months in November as production expanded across the board, pointing to underlying U.S. economic strength.

“The continued free-fall in crude is the main thing here,” said Uri Landesman, president at Platinum Partners in New York.

Landesman said the benchmark S&P 500 could test 1,750.

The Dow Jones industrial average .DJI fell 56.48 points, or 0.33 percent, to 17,224.35. The S&P 500 .SPX slid 7.73 points, or 0.39 percent, to 1,994.6 and the Nasdaq Composite .IXIC lost 36.98 points, or 0.79 percent, to 4,616.62.

In Europe, the FTSEurofirst 300 .FTEU3 index of top regional shares fell 2.35 percent to close at 1,290.65 while MSCI’s all-country world index .MIWD00000PUS, which measures stock performance in 45 countries, fell 1.06 percent to 404.40.

The broad STOXX 600 .STOXX fell 2.2 percent in Europe, and has dropped 7.9 percent over the past six sessions, wiping out about $710 billion in market capitalization.

“The drop in oil would normally be good news for the European economy, but in this case it’s actually bad news because it seriously raises the risk of deflation,” said Christian Jimenez, fund manager and president of Diamant Bleu Gestion in Paris.

MSCI’s emerging markets index .MSCIEF fell 1.7 percent.

Brent crude LCOc1 hit a five-year low near $60 a barrel before paring losses, settling down 79 cents at $61.06. U.S. crude for January CLc1 settled down $1.90 at $55.91, a price last seen in May 2009.

Growth worries have supported bets the Federal Reserve might consider keeping its pledge to leave U.S. short-term interest rates near zero for a “considerable period” in its latest policy statement at the end of a two-day meeting on Wednesday. [FED/DIARY]

The price on benchmark 10-year Treasury notes US10YT=RR fell 3/32, pushing its yield up to 2.1165 percent.

The euro EUR= was last down 0.2 percent against the dollar at $1.2435. The dollar was 0.87 percent lower against the yen JPY= at 117.74 yen.

(Reporting by Herbert Lash; Additional reporting by Rodrigo Campos; Editing by Dan Grebler and James Dalgleish)

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