* Oversupply fears pressure crude prices after overnight
rally
* European bourses open lower
* Dollar struggles across the board
* China's yuan hits four-year low in offshore trade
By Jemima Kelly
LONDON, Dec 30 (Reuters) - Global stock markets fell on
Wednesday as oil prices slumped back towards 11-year lows,
sapping investors' appetite for risky assets and hurting the
shares of mining and energy companies.
Stock markets rallied the previous day as oil prices
rebounded on prospects for lower temperatures on both sides of
the Atlantic. But on Wednesday benchmark Brent crude slid back
below $37 a barrel LCOc1 , with investors worried about slowing
demand and high supplies. O/R
The fall in oil prices has been a major driver of financial
markets this year, hammering energy companies, lowering
inflation expectations and reinforcing bets on loose monetary
policy in Europe and a slow tightening in the United States.
The pan-European FTSEurofirst 300 index .FTEU3 fell 0.5
percent, while the euro zone's blue-chip Euro STOXX 50 index
.STOXX50E declined by 0.6 percent, having both gained in the
previous session.
Asian shares unwound earlier gains, with continued weakness
in Chinese stocks. MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS edged down 0.1 percent, on track
for a flat monthly performance and down 12 percent for the year.
"The ongoing weakness in the oil price is dragging down the
markets," said John Plassard, senior equity sales executive at
Mirabaud Securities in Geneva.
Crude prices have plunged by two-thirds since mid-2014 as
soaring output from the Organization of the Petroleum Exporting
Countries (OPEC), Russia and the United States led to a global
surplus of between half a million and 2 million barrels per day.
Spreadex analyst Connor Campbell added that a warning by the
head of the International Monetary Fund in a newspaper column
that global economic growth would be disappointing next year was
further pressuring markets.
The yen, which is traditionally sought at times of market
uncertainty, inched up to 120.425 yen JPY= per dollar. That
left it close to a two-month high of 120.05 yen hit last week.
DOLLAR LAGGING
The dollar was 0.1 percent lower against a basket of major
currencies .DXY , adding to a weak end to the year that has
seen it fall more than 2 percent in just under a month. FRX/
BNP Paribas (PA:BNPP) currency strategist Michael Sneyd said there had
been a disconnect between the dollar and U.S. Treasury yields
since the Federal Reserve raised interest rates for the first
time in almost a decade earlier this month.
"Since the Fed's liftoff, the dollar has lagged behind
markedly. We would put that down to most market participants
being out of the market at the moment," he said.
China's yuan fell to its weakest in over four years in
offshore trading, after the People's Bank of China set a lower
midpoint. Sources told Reuters the PBOC was temporarily
suspending some foreign banks' foreign exchange, in an effort to
curb the yuan's depreciation.
China's blue-chip CSI300 index .CSI300 was down 0.2
percent, while the Shanghai Composite Index .SSEC was flat,
ahead of December manufacturing activity surveys in the coming
days which are expected to show the economy remains sluggish.
Japan's Nikkei .N225 ended the country's final trading day
of the year up 0.3 percent, off session highs but still gaining
9.1 percent for 2015. But it shed 3.6 percent in December.
On the last trading day of 2015 for European bond markets,
10-year German Bund yields DE10YT=TWEB were flat at 0.63
percent and up nearly 10 basis points on the year.
Gold ticked higher, with gains capped by weaker oil,
although the metal remained on track for a third successive
yearly fall.