World stocks fall on oil weakness, China concerns

By Chuck Mikolajczak

NEW YORK (Reuters) - Global equity markets were lower on Monday in light trading sandwiched by holidays in a number of markets, pressured by slumping oil prices and worries over growth in China's economy.

Prices of both Brent and U.S. crude fell more than 3 percent, reversing a brief rebound and dragging U.S. energy shares down 2 percent as the worst performing of the major S&P sectors.

Crude once again moved within sight of an 11-year low, with Brent at $36.71 and U.S. crude at $36.83 as excess supply continues to weigh on the commodity.

"The 3-percent dive in crude oil this morning shows you that the sellers are still in control of the energy market, and that's leading jitters on Wall Street, coupled with just normal digestive action after last week's strong gains," said Adam Sarhan, chief executive of Sarhan Capital in New York.

The Dow Jones industrial average fell 90.24 points, or 0.51 percent, to 17,461.93, the S&P 500 lost 13.18 points, or 0.64 percent, to 2,047.81 and the Nasdaq Composite dropped 33.51 points, or 0.66 percent, to 5,014.98.

A weak batch of industrial profits raised concerns about the slowing of China's economy and sent Chinese stocks lower by almost 3 percent, their biggest drop in a month.

Profits at Chinese industrial companies in November fell 1.4 percent from a year earlier, the sixth consecutive month of decline and another sign that the world's chief engine of growth for the past decade is sputtering.

With trading light in the United States and Europe due to the bookended holidays of Christmas and the upcoming New Year's Day, as well as a holiday on Monday in the United Kingdom, markets could see exaggerated moves this week.

MSCI's all-country world index lost 0.44 percent, while the pan-European FTSEurofirst 300 index shed 0.36 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan gave up early modest gains to fall half a percent, putting it on track for a 12-percent loss this year.

Yields on benchmark 10-year Treasury notes inched down to 2.2392 percent, up 1/32 in price.

The dollar was little changed against a basket of major currencies, off 0.06 percent at 97.922. But the drop in oil prices hurt currencies linked to the commodity, such as the Australian and Canadian dollars.

The Australian dollar fell 0.3 percent to $0.7264 while its Canadian counterpart fell 0.5 percent to $1.3887, heading back towards this month's 11-year lows.

Spot gold was down 0.5 percent at $1,070.81 an ounce and was on track for its sixth straight quarterly decline, its longest run of quarterly losses since the mid-1970s.

(Additional reporting by Abhiram Nandakumar; Editing by Nick Zieminski)