Dec 12, 2014 02:10 PM EST
The relentless slide in oil prices pressured energy stocks and currencies exposed to crude exports on Friday, while dousing the appetite for riskier assets and encouraging investors to seek safety in core government bonds.
Major European equity indexes, some of which posted their biggest weekly losses in three years, fell more than 2 percent. Stocks on Wall Street, except for Nasdaq, fell more than 1 percent before paring some losses.
In Europe, the sell-off gathered pace in late trading.
"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," Saxo Bank trader Pierre Martin said in Paris.
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 is down 11 percent for the week, pushing its slump from a June peak above $115 to almost 47 percent.
Brent LCOc1 was last at $62.23 a barrel, down $1.45, while U.S. crude CLc1 was off $1.65 at $58.30, its weakest since May 2009.
The plunge in oil prices battered currencies strongly 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 2.0904 percent.
"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 CapitalMarkets in New York.
U.S. stocks dipped, putting the benchmark S&P 500 on track to snap seven weeks 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 Dow Jones industrial average .DJI was down 194.36 points, or 1.10 percent, at 17,401.98. The Standard & Poor's 500 Index .SPX was down 16.17 points, or 0.79 percent, at 2,019.16. The Nasdaq Composite Index .IXIC was down 21.24 points, or 0.45 percent, at 4,686.93.
The S&P energy sector .SPNY was down 1.0 percent and has shed more than 16 percent this year, making it the worst- performing of the 10 major S&P sectors.
MSCI's all-country world equity index .MIWD00000PUS fell 0.87 percent to 410.74, while the FTSEurofirst 300 .FTEU3 index of top European shares closed down 2.6 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.
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