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NEW YORK (Reuters) - Oil's relentless slide pounded energy stocks and currencies exposed to crude exports on Friday, doused the appetite for riskier assets and pushed investors into the safety of government debt despite strong U.S. consumer sentiment.
The Dow industrials and major European equity indexes posted their biggest weekly losses in three years, as shares in Europe fell more than 2 percent and stocks on Wall Street, with the exception of Nasdaq, fell nearly as much.
In Europe, the sell-off gathered pace in late trading, and the same occurred just before the end of U.S. trading. Even sectors geared to consumer discretionary and staples succumbed despite a rise in U.S. consumer confidence in December to a near eight-year high.
"This is a bloodbath. After such a negative week, there's not even a rebound into the close. The fact that oil can't find a floor is spooking market players," said Saxo Bank trader Pierre Martin in Paris.
The Paris-based International Energy Agency, which coordinates the energy policies of industrialized nations, cut its demand outlook for 2015, triggering oil's collapse on Friday.
The price of Brent crude plumbed lows last seen in July 2009, with the global oil benchmark slipping below $62 a barrel on concerns over a worldwide supply glut and weak demand.
Brent prices lost nearly 11 percent for the week, pushing their slump from a June peak above $115 to almost 47 percent.
Brent LCOc1 fell $1.83 to settle at $61.85 a barrel, while U.S. crude CLc1 settled down $2.14 to $57.81, its weakest since May 2009.
The plunge in oil prices battered currencies linked to crude exports, with Norway's crown NOK= falling to an 11-year low against the U.S. dollar and the Russian ruble RUB= hitting another record low. The Canadian dollar slumped to a 5-1/2-year trough against the greenback CAD=D4.
"We're reaching a point where there's a risk of seeing corporate and sovereign defaults in energy-producing countries, which could revive global systemic risks," said Christophe Donay, head of strategy at Pictet, which has $441 billion in assets under management and custody.
Sovereign debt yields fell on growing concerns about disinflation as slowing European growth pushed the yield of German and U.K. government debt to record lows.
Bets increased that the European Central Bank will be forced to resort to further stimulus early next year.
German 10-year yields DE10YT=TWEB, the euro zone benchmark, dipped to a record low of 0.619 percent. The yield on 10-year U.S. Treasuries US10YT=RR fell to 2.0835 percent, with the note's price rising by 27/32.
"The sell-off in crude oil is really pressuring bond prices higher ... it's extremely deflationary," said Tom di Galoma, head of rates and credit trading at ED&F Man Capital Markets in New York.
U.S. stocks fell, ending the benchmark S&P 500's seven-week streak of gains. Weak oil prices have increased worries about global demand and raised concerns about earnings for energy companies, with year-end tax selling adding pressure.
The S&P energy sector .SPNY was down 2.15 percent and has shed more than 16 percent this year, making it the worst- performing of the 10 major S&P sectors. Since oil prices peaked in June, the index is down 26 percent.
The Dow Jones industrial average .DJI closed down 315.51 points, or 1.79 percent, to 17,280.83. The S&P 500 .SPX slid 33 points, or 1.62 percent, to 2,002.33 and the Nasdaq Composite .IXIC lost 54.57 points, or 1.16 percent, to 4,653.60.
MSCI's all-country world equity index .MIWD00000PUS fell 1.36 percent to 408.68. In Europe, the FTSEurofirst 300 .FTEU3 index of top regional shares closed down 2.63 percent at 1,321.73 in its biggest weekly loss, at 5.9 percent, since August 2011.
Britain's FTSE share index .FTSE lost 2.5 percent to post its biggest weekly loss in more than three years.
The dollar cut its losses against the euro and extended gains against the yen. It was up 0.38 percent against the euro at $1.2456 EUR= and erased early nearly all losses against the yen to trade down 0.02 percent at 118.63 yen JPY=.
Reporting by Herbert Lash; Editing by James Dalgleish and Dan Grebler