December 11, 2014 / 12:38 AM / 4 years ago

Shares fall on oil's five-year low; dollar slides

NEW YORK (Reuters) - Oil prices slumped to five-year lows on Wednesday and U.S. and European equity markets fell as investors, worried about the Greek and Chinese economies, withdrew from riskier positions and bought the Japanese yen, which rose against the U.S. dollar.

A man changes the price for a gallon of gasoline at a gas station in Medford, Massachusetts December 4, 2014. REUTERS/Brian Snyder

Brent crude oil fell to $63.56 a barrel, the lowest since July 2009, on signs of oversupply and waning demand. U.S. and European markets were dragged lower by losses in energy, with all three major U.S. stock indexes falling more than 1.5 percent. The S&P energy index .SPNY closed down over 3 percent as the worst-performing sector.

Oil prices have been pressured by a strong U.S. dollar and OPEC’s decision against an output cut. Brent crude LCOc1 settled down $2.60, or 3.89 percent, at $64.24 a barrel. U.S. crude CLc1 settled down $2.88, or 4.51 percent, at $60.94 a barrel.

“Weak demand for energy at lower prices concerns investors about the prospect for global economic growth, and they are locking in profits for the year and selling as deflationary fears start to seep in,” said Robert Stein, chief executive officer at Astor Investment Management in Chicago.

The drag on European energy shares sent the region’s broad FTSEurofirst 300 index .FTEU3 into negative territory for a third straight session.

Chinese shares rebounded on hopes for easing of monetary policy, after data showed inflation in the world’s second-biggest economy hit a five-year low last month. But losses in U.S. and European shares overshadowed gains in China.

In Europe, Greek shares were among the top losers on mounting concerns over the country’s politics, down 1 percent, adding to Tuesday’s roughly 13 percent plunge.

The dollar posted its biggest one-day loss against the yen since June 2013 on worries over Greece and the weakness in Chinese economic data. The greenback was last down 1.47 percent against the yen at 117.93 yen JPY=.

The dollar has lost about 3 percent versus the yen the last three days after hitting a seven-year peak above 121 yen on Monday.

U.S. government bond yields, which move inversely to prices, fell after strong demand at an auction of 10-year notes and on safe-haven bids. German government bond yields also fell to record lows on safe-haven demand. U.S. 30-year US30YT=RR yields hit 2.82 percent, their lowest since Oct. 16.

MSCI’s all-country world equity index .MIWD00000PUS was last down 1.3 percent at 414.77. Europe’s FTSEurofirst 300 index .FTEU3 closed down 0.43 percent at 1,357.21.

The Dow Jones industrial average .DJI closed down 1.51 percent at 17,533.15, while the S&P 500 .SPX closed down 1.64 percent at 2,026.14. The Nasdaq Composite .IXIC closed down 1.73 percent at 4,684.03.

Benchmark 10-year U.S. Treasury notes US10YT=RR were last up 14/32 in price to yield 2.17 percent.

Gold dipped from seven-week highs on pressure from tumbling oil prices. U.S. gold futures GCcv1 for February delivery settled down $2.60, or 0.2 percent, at $1,231.80 an ounce.

Reporting by Sam Forgione; Additional reporting by Jamie McGeever and Sudip Kar-Gupta in London and Chuck Mikolajczak and Gertrude Chavez-Dreyfuss in New York; Editing by Dan Grebler

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