* U.S. crude oil hits 13-year lows
* Global equities set for worst month since October 2008
* Yen strengthens on safe-haven bid
(Adds oil settlement prices, close of U.S. markets)
By Chuck Mikolajczak
NEW YORK, Jan 20 (Reuters) - Global equity markets staged a
late rebound along with oil prices on Wednesday to cut declines
from 2-1/2 year lows, but remained on pace for one of the most
dismal monthly performances on record.
Oil prices tumbled once again after the International Energy
Agency warned Tuesday the market could "drown in oversupply" and
on concerns about the impact of a slowing China on global
economic growth. The rout in oil prices has
prompted spending cuts and layoffs in the energy sector and
sparked concerns about the impact of energy loans on the banking
sector.
Indexes managed to rebound from steep losses, however, as
new front month March futures CLc2 and Brent LCOc1 pared
declines.
"If you look at crude prices, they are shooting right back
up, so I would say you can blame whatever is in equities to
crude because they are incredibly highly correlated," said Randy
Frederick, managing director of trading and derivatives for
Charles Schwab (N:SCHW) in Austin.
"There is no doubt that is why equities are going up."
Wall Street ended with declines of more than 1 percent after
tumbling more than 3 percent during the trading session.
Healthcare .SPXHC was the only one of the 10 major sectors in
positive territory while the energy sector .SPNY cut losses in
half to finish down 2.9 percent.
The Dow Jones industrial average .DJI fell 249.28 points,
or 1.56 percent, to 15,766.74, the S&P 500 .SPX lost 22
points, or 1.17 percent, to 1,859.33 and the Nasdaq Composite
.IXIC dropped 5.26 points, or 0.12 percent, to 4,471.69.
The MSCI World equity index .MIWD00000PUS lost 2 percent
after falling as much as 3.4 percent its lowest level since June
2013. The index has already dropped 10.5 percent in January,
which if sustained would be the worst monthly loss since October
2008, the month after Lehman Brothers went bankrupt.
There have been steeper monthly drops only five times in the
MSCI World index's 28-year history, two of which occurred during
the financial crisis in 2008.
U.S. crude plunged to a low of $26.19, its lowest since May
2003. WTI CLc1 for February delivery, which expired at the end
of the day, settled down 6.7 percent to $26.55 while Brent crude
lost 3.1 percent, to $27.88.
European shares closed at their lowest level since October
2014, with the FTSEurofirst 300 .FTEU3 down 3.3 percent, to
notch its biggest single-session decline in six weeks.
France's CAC .FCHI and Britain's FTSE .FTSE both tumbled
more than 3 percent for their worst session declines of the
year and Germany's DAX .GDAXI lost 2.8, for its worst daily
drop since the first trading day of 2016. The decline confirmed
a bear market for the FTSE, down 20.1 percent from its closing
high in April.
Oil shares in Europe .SXEP are down more than 14 percent
already this year and at their lowest levels since March 2003.
That has been a major weight on the FTSEurofirst 300, which is
down nearly 12 percent in 2016 and more than 23 percent from its
high in April.
The safe-haven yen JPY= climbed as risk appetite soured,
dragging the dollar to a one-year low, as investors trimmed the
chances of more tightening by the Federal Reserve. The U.S.
currency was down 0.6 percent at 116.88 yen after hitting a
session low of 115.96 yen.
While the dollar fell against the yen, it was strong against
emerging market currencies, compounding the misery for many
countries already suffering from low oil prices.
Demand for U.S. bonds, another asset sought in times of
uncertainty, was high, with yields on benchmark 10-year Treasury
notes US10YT=RR down to 1.9911 percent, after falling as low
as 1.939 percent, up 13/32 in price. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
YTD asset performance http://fingfx.thomsonreuters.com/2014/05/01/1605285136.htm
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