European stocks sank on Wednesday, after losses in Asia and on Wall Street, as the energy sector took a beating from an oil price slump.
Crude prices were lower again, after diving more than two percent on Tuesday on increasing fears of a global supply glut, as continued production in the US and elsewhere offsets an OPEC output cut deal.
“Cheap oil is taking its toll on the global equity markets,” noted analyst Ipek Ozkardeskaya at trading firm London Capital Group.
Crude prices are considered crucial to the smooth running of world financial markets because the commodity oils the wheels of the global economy.
By midday, the London stock market had shed 0.4 percent, while Frankfurt fell 0.5 percent and Paris wiped out 0.8 percent in value compared with the close on Tuesday.
“European equities are in the red… as the slump in the price of oil continues to weigh on market sentiment,” said analyst David Madden at CMC Markets.
“The other fear about falling oil prices is declining inflation, as it can hamper growth prospects.”
New York oil on Tuesday hit a seven-month low at $42.75 per barrel, and London Brent crude struck a similar nadir at $45.42.
Prices later recovered somewhat but remained on a downward trend on Wednesday.
The oil slump saw energy firms drag down Wall Street on Tuesday.
The selloff continued in Asia, with Tokyo down 0.5 percent, Hong Kong losing 0.6 percent and Sydney sinking 1.6 percent.
Shanghai bucked the trend to end up 0.5 percent after the US-based MSCI finally approved Chinese mainland-listed stocks, or A-shares, for inclusion in its emerging markets index.
Elsewhere Wednesday, investors digested British Queen Elizabeth II’s speech to parliament focused heavily on the UK’s Brexit plans.
British Prime Minister Theresa May presented eight draft laws to take Britain out of the European Union in a legislative programme read out by the queen.
The laws include the “Great Repeal Bill” to overhaul existing EU legislation and separate bills on customs, trade, immigration, fisheries and agriculture.
– Key figures around 1100 GMT –
London – FTSE 100: DOWN 0.4 percent at 7,439.54 points
Paris – CAC 40: DOWN 0.8 percent at 5,251.96
Frankfurt – DAX 30: DOWN 0.5 percent at 12,747.27
EURO STOXX 50: DOWN 0.6 percent at 3,539.87
Tokyo – Nikkei 225: DOWN 0.5 percent at 20,138.79 (close)
Hong Kong – Hang Seng: DOWN 0.6 percent at 25,694.58 (close)
Shanghai – Composite: UP 0.5 percent at 3,156.21 (close)
New York – Dow: DOWN 0.3 percent at 21,467.14 (close)
Euro/dollar: UP at $1.1147 from $1.1132 at 2100 GMT on Tuesday
Pound/dollar: DOWN at $1.2617 from $1.2624
Dollar/yen: DOWN at 111.20 yen from 111.46 yen
Oil – Brent North Sea: DOWN 25 cents at $45.77 per barrel
Oil – West Texas Intermediate: DOWN 17 cents at $43.34