Oil price slump sends European stocks spiralling lower

Global oil prices tanked Friday to fresh five-year lows, sending European and US stocks sliding, after a gloomy crude demand downgrade from the International Energy Agency and more weak Chinese economic data.

US benchmark West Texas Intermediate (WTI) for January delivery lost $1.19 in early trading in New York to plunge to $58.76 per barrel -- the lowest level since mid-July 2009 -- having already closed under the psychological level of $60 on Thursday.

Brent crude for January meanwhile dived $1.12 to $62.56 in London trading.

The oil market -- which has shed almost 50 percent since June -- plumbed the latest lows after the Paris-based IEA slashed its 2015 demand outlook, despite plunging prices.

Demand is set to grow by 0.9 million barrels a day to reach 93.3 million barrels, some 230,000 barrels less than the previous forecast, the IEA energy watchdog said in a report.

"Oil prices continue to dominate the markets as the IEA lowered oil demand expectations for the fourth time in five months," said IG analyst Alastair McCaig.

This week's dizzying drop in oil prices weighed heavily on Europe's energy sector on Friday.

In mid-afternoon trading in London, the benchmark FTSE 100 index fell 1.40 percent to 6,370.95 points compared with Thursday's close.

The CAC 40 in Paris shed 1.36 percent to 4,168.58 points and Frankfurt's DAX 30 lost 1.50 percent to 9,714.24.

"The FTSE, having a far greater weighting to the energy and commodity sector, has suffered more than most," added McCaig.

- Energy sector hit -

Shares in oil services company Petrofac topped the FTSE 100 losers, shedding 4.97 percent to 688.00 pence.

Energy explorer Tullow Oil saw a smaller slide of 1.93 percent to 365.60 pence, while oil major BP fell 2.48 percent to 388.90 pence.

Back in Paris, shares in French oil and gas giant Total dropped 1.43 percent to 41.960 euros.

Slumping oil prices weigh on the energy sector because they eat into company profits.

At the same time, however, cheaper crude also help stimulate economic growth in the longer term.

"While commodities are in free fall, the major indices will take a beating in the short term -- but looking ahead should help lift the ailing economies out of the mire," added analyst Mike McCudden at broker Interactive Investor.

Greek stocks however steadied after a three-day slide over fears of political instability due to a looming presidential election. The Athens exchange practically levelled out in early afternoon trade at a loss of 0.15 percent and 829 points.

In New York, US stocks followed European equity markets lower in opening trade on worries about plunging oil prices.

Five minutes into trade, the Dow Jones Industrial Average had shed 0.52 percent to stand at 17,504.25 points.

The broad-based S&P 500 fell 0.45 percent to 2,026.18, while the tech-rich Nasdaq Composite Index declined 0.47 percent to 4,686.08.

Markets were also hit Friday after China said industrial output expanded at its slowest pace in three months in November, while fixed asset investment, a measure of government spending on infrastructure, was also easing.

Shanghai rose 0.42 percent higher on hopes for further government stimulus measures while Hong Kong eased 0.27 percent.

Tokyo rose 0.66 percent as the yen eased after a recent pick-up, while Seoul added 0.27 percent, but Sydney slipped 0.22 percent.

- Ruble hits new low -

In foreign exchange, the ruble sank Friday to record lows on the back of sliding oil, despite Russia's central bank hiking its interest rate the day before in an attempt to halt the currency's plunge and the resulting price rises.

The ruble sank to fresh record levels of 72.14 against the euro and 57,98 against the dollar as the Moscow stock exchange opened, before rallying slightly as the central bank apparently intervened.

The euro meanwhile drifted higher in mid-afternoon to $1.2473 from $1.2410 late in New York on Thursday.

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