NEW YORK (Reuters) - Equity markets worldwide tumbled on Monday, led by commodity-linked shares as oil prices fell to 5-1/2-year lows and investors fled to the safety of government bonds.
Brent and U.S. crude oil prices dropped to their lowest levels since spring 2009, hit by a global supply glut and lackluster demand. Strength in the U.S. dollar, which touched a near nine-year high against the euro on the EBS platform, weighed on dollar-denominated commodities.
Russia's oil output hit a post-Soviet high last year, while Iraq's oil exports in December were the highest since 1980. Brent crude LCOc1 for February fell to as low as $52.66 per barrel before settling down $3.31 at $53.11 a barrel. U.S. crude CLc1 dipped to a low of $49.68 per barrel and settled down $2.65 at $50.04 a barrel.
In the U.S. stock market, the S&P 500 energy sector .SPNY closed down 4 percent, extending a decline of almost 20 percent recorded over the last two quarters of 2014. In Europe, oil and gas .SXEP and basic resources .SXPP indexes closed down 4.9 percent and 3.6 percent, respectively.
Both the Dow and S&P 500 suffered their biggest one-day declines in about three months, and all 10 S&P 500 sectors fell.
"We were at this elevated high at the end of December, adding to the impetus for the decline on top of worldwide growth concerns and what's going on in energy," said Stephen Massocca, chief investment officer of Wedbush Equity Management LLC in San Francisco.
Political uncertainty in Greece, which has renewed fears of a Greek exit from the euro zone, also rattled European stocks ahead of the country's elections later this month.
The U.S. dollar index .DXY, which measures the greenback against a basket of six major currencies, hit a nine-year high of 91.775 and was last up 0.35 percent at 91.396. The euro fell to a near nine-year low against the dollar of $1.18605 on the EBS platform, tumbling on the worries over Greece.
Weaker oil prices and the stronger dollar weighed on emerging markets shares, which hit more than two-week lows. Chinese shares were the exception, reaching a five-year closing high.
The concerns about Greece and Europe's economy helped push long-dated U.S. Treasury yields to their lowest levels since August 2012. The yield on the 30-year U.S. Treasury US30YT=RR bond was last at 2.604 percent after touching a low of 2.592 percent. German 10-year Bund yields DE10YT=TWEB hit a record low of 0.492 percent.
MSCI's all-country world index .MIWD00000PUS was last down 1.89 percent at 408.06. Europe's broad FTSEurofirst 300 index .FTEU3 closed down 2.25 percent at 1,332.47. The euro zone's blue-chip Euro STOXX 50 .STOXX50E fell 3.7 percent, the biggest one-day percentage drop since late 2011.
The Dow Jones industrial average .DJI closed down 1.86 percent at 17,501.65. The S&P 500 .SPX closed down 1.83 percent at 2,020.58. The Nasdaq Composite .IXIC closed down 1.57 percent at 4,652.57.
Spot gold prices XAU= rose $17.07 to $1,205.95 an ounce.
Reporting by Sam Forgione; Additional reporting by Rodrigo Campos, Sinead Carew and Michael Connor in New York and Atul Prakash and Christopher Johnson in London; Editing by Leslie Adler and Dan Grebler