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Stock prices fell on global markets on Tuesday, stuck in a dismal start to 2015 on tumbling oil prices and Greece possibly leaving the Euro zone, as nervous investors bought more gold, yen, low-risk government bonds and other safe-haven assets.
The oil market rout that began in mid-2014 has continued, with Brent crude futures falling to near 5-1/2-year lows of $51 a barrel. This intensified concerns about how the dramatic price drop, due to sluggish global growth and a supply glut, will hurt earnings of oil companies and exacerbate disinflationary pressure worldwide.
"Global risk sentiment has been hurt by sliding stocks and oil prices. That is leading to a perception that there is a lack of demand, and that has implications for global growth," said Jeremy Stretch, head of currency strategy at CIBC World Markets in London.
Greece's anti-bailout party Syriza held a slim lead in polls before the January 25th national election, which rekindled speculation whether the Euro zone might let the country leave the economic bloc rather than renegotiate Greece's international bailout.
Data on Tuesday showed Euro zone manufacturers registered almost no growth in the fourth quarter, putting pressure on the European Central Bank to take bold steps to avert the region from slipping into recession.
US and European equity markets enjoyed a brief respite, but investors resumed Monday's exit of stocks following disappointing data on the US services sector and factory orders.
In midday US trading, the Dow Jones industrial average was down 190.51 points, or 1.09 per cent, at 17,311.14.
The Standard & Poor's 500 Index was down 22.72 points, or 1.12 per cent, at 1,997.86. The Nasdaq Composite Index was down 73.11 points, or 1.57 per cent, at 4,579.46.
The benchmark 10-year US Treasury note was up 42/32, with the yield at 1.8903 per cent.
The FTSEurofirst 300 index of top European shares was down 0.6 per cent at 1,324.67.
Japanese shares posted their worst one-day drop in 10 months overnight.
The MSCI world equity index, which tracks shares in 45 nations, 1.06 per cent, to 403.68.
Investors poured more money into top-rated government debt, driving average yields on German, US and Japanese 10-year debt to less than 1 percent for the first time.
Ten-year Bund yields fell to record low of 0.442 per cent, while 10-year Treasuries yield fell below 2 per cent for the first time since mid-October.
The dollar lost more 1 per cent to 118.27 yen, retreating further from a seven-year peak of 121.86 set last month.
The euro shed more than 1 percent against the yen to 141.17 yen, a two-month low.
Gold hit a three-week high on safe-haven bids and last traded up $8, or 0.7 percent, to $1,212.10 an ounce. It earlier struck a session peak of $1,214.40, its highest since Dec. 16.
In the oil market, Brent crude was last down $1.92, or 3.6 percent, at $51.19 a barrel. U.S. crude was last down $2.06, or 4.1 percent, at $47.98 per barrel.
