Global stocks slip on oil, Greece

Global stock markets slumped Tuesday as oil prices struck fresh five-year lows, China clamped down on speculative trading and Greece sparked renewed worries about the eurozone.

"Misery loves company; never has this been truer than on the markets today," said Connor Campbell at Spreadex traders.

"Another round of poor economic data, more volatility from the permanently volatile Greece and oil's continued descent into the abyss has seen a dismal day..."

The red tide on trading screens began in Asia, where equity markets retreated on profit-taking after a healthy run-up over the past week, while energy firms took a hiding.

Tokyo dropped 0.68 percent, snapping a seven-session winning streak, while Sydney tumbled 1.68 percent as energy shares were punished.

In China, Shanghai's equity market sank 5.4 percent after authorities announced a new rule late Monday tightening the use of corporate bonds as collateral for short-term financing -- a move analysts said will curb investors' ability to trade on margin.

"Risk appetite suffered further setbacks during today's session as crude oil prices slid to a five year low, prompting investors to take flight in safe haven assets," said Sucden Research analyst Kash Kamal.

After hitting its new trough at $65.29 a barrel Tuesday, Brent North Sea crude for delivery in January recovered to $66.75, up 56 cents from Monday's close.

US benchmark West Texas Intermediate (WTI) for January also hit the lowest level since 2009, reaching $62.25 a barrel. It later stood at $63.70, up 65 cents from Monday.

Crude prices have plunged by more than 40 percent from their 2014 peaks in June owing to slowing growth in China and emerging-market economies, a recession in Japan and a near-stall in the eurozone.

Cheap oil will hurt oil exporters dependant on crude revenues, and the stock markets of the energy-rich Gulf states took a beating.

The decline was led by the Dubai Financial Market, which dropped 6.0 percent to a five-month low, before a partial recovery.

- Greek worries, again -

European indices fell sharply, where added to the mix were concerns about a fresh crisis in Greece that could renew worries about the struggling eurozone.

London's benchmark FTSE 100 fell 2.14 percent to 6,529.47 points, in Paris the CAC 40 sank 2.55 percent to 4,263.94, while in Frankfurt the DAX 30 shed 2.21 percent to 9.793,71 points.

Milan tumbled 2.8 percent and Madrid lost 3.1 percent.

"Political uncertainty in Greece acted as one of the main drivers for the sell-off in Europe after the Greek government brought forward the presidential election to next week," said Kamal.

Greek stocks plunged 12.8 percent -- the largest one-day drop in 27 years -- after the government unexpectedly brought forward a high-stakes presidential vote.

The move raised questions over the recovery plan for the country which nearly caused the breakup of the eurozone.

Demand for safe-haven assets such as German 10-year bonds spiked, sending the yield to a new record low of 0.685 percent. French 10-year bonds touched a new record low of 0.954 percent.

In European equities trading, Tesco shares were the biggest loser in London, sinking 6.6 percent to close at 174.90 pence after it sharply reduced its profit forecast.

The world's third biggest supermarket group said its trading profit "will not exceed £1.4 billion" ($2.2 billion, 1.8 billion euros) in its financial year to February 2015. Analysts' consensus had been for £1.94 billion as Tesco undergoes changes to its business triggered by a fraud probe.

"Tesco is no longer a viable investment," said Marc Kimsey, senior trader at Accendo Markets.

Wall Street was also pulled lower, with the Dow Jones Industrial Average falling 0.93 percent to 17,686.63 points.

The broad-based S&P 500 shed 0.82 percent to 2,043.40 points and the tech-rich Nasdaq Composite Index slid 0.60 percent to 4,712.46 points.

In foreign currency markets, the euro rallied against the dollar on Tuesday, a day after the European single currency hit a two-year low against the US currency.

One euro bought $1.2412 in late European trading, compared to $1.2308 on Monday.

Gold, another safe-haven asset, also benefitted from increased risk aversion among investors.

On the London Bullion Market, gold finished at $1,227 an ounce, having risen as far as $1,238.34 during the session, up sharply from $1,193 on Monday.