A renewed drop in oil prices due to worries about a global supply glut on Monday hurt U.S. and European stock markets and weighed on the dollar following a rebound in those sectors late last week.
Anxiety about the drag from tumbling energy prices on global economic growth and central bank policies revived safe-haven demand for the yen, gold and U.S. government debt.
Crude oil prices fell 4 percent as Iraq announced record-high oil production feeding into a heavily oversupplied market, wiping out much of the gains made in one of the biggest-ever daily rallies last Friday. [O/R]
"The news that Iraq has probably hit another record builds on the oversupply sentiment," said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.
The oil-led market turbulence since the start of 2016 has raised hopes of more aid from major central banks.
Last week, European Central Bank chief Mario Draghi signaled the bank was open to more monetary stimulus to combat weak growth and inflation in the euro zone.
Traders have bet the Federal Reserve would seek to soothe financial markets after its two-day meeting on U.S. monetary policy that will begin on Tuesday. [FED/DIARY]
Global markets slumped at the start of the year on fears that a slowdown in China would spread to the rest of the world economy, and oil prices sank to 13-year lows.
German business confidence deteriorated to an 11-month low in January, a survey showed, suggesting growing concern among company executives in Europe's largest economy.
The Dow Jones industrial average .DJI was down 83.34 points, or 0.52 percent, at 16,010.17, the S&P 500 .SPX was 12.71 points, or 0.67 percent, lower at 1,894.19 and the Nasdaq Composite .IXIC was down 25.75 points, or 0.56 percent, to 4,565.43.
The pan-European FTSEurofirst 300 index .FTEU3 provisionally closed down 0.7 percent, while Tokyo's Nikkei .N225 ended 0.9 percent higher. [.EU] [.T]
The MSCI world equity index .MIWD00000PUS, which tracks shares in 45 nations, fell 1.3 points or 0.35 percent, to 366.67.
Losses in oil and Wall Street pushed the greenback lower. The dollar index .DXY, which tracks the greenback versus a basket of six currencies, slipped 0.1 percent, to 99.445. [FRX/]
The yen edged up 0.2 percent against the dollar at 118.53 yen JPY=, and was steady against the euro at 128.32 yen EURJPY=.
Brent crude oil futures LCOc1 fell 4 percent to $30.89 a barrel while U.S. crude CLc1 slumped 4.7 percent to $30.67.
Iraq's oil ministry told Reuters on Monday that oil output reached a record high in December, putting oil prices under renewed pressure.
U.S. 10-year Treasury yields were down 3 basis points at 2.02 percent US10YT=TWEB, as the fall in oil prices underpinned support for safe-haven debt. [US/]
Spot gold XAU= rose 0.85 percent to $1,107.19 an ounce. [GOL/]
About the author
Research Associate at Center for Islam and Global Affairs (CIGA) at Istanbul Sabahattin Zaim University