* Commodity prices index hits lowest since August 2002
* Brent crude under $35 a barrel for first time since 2004
* Emerging market stocks lowest since mid-2009
(Updates prices, adds Fed minutes)
By Rodrigo Campos
NEW YORK, Jan 6 (Reuters) - Stocks across the world fell on
Wednesday as China fuelled fears about its economy by allowing
the yuan to weaken further and after a nuclear test by North
Korea added to a growing list of geopolitical worries.
Brent crude futures tumbled to 11-year lows as a row between
Saudi Arabia and Iran made any cooperation between major
exporters to cut output even more unlikely. WTI fell below $34 a
barrel to its lowest since Feb. 2009.
Energy stocks led the slide on Wall Street, with the S&P 500
at a three month low despite strong U.S. job market data. Losses
grew after minutes from the latest Federal Reserve meeting
showed some Fed officials were worried inflation could get stuck
at dangerously low levels.
Traders and economists feared the move from China to further
depreciate the yuan may mean the world's second-biggest economy
is even weaker than had been expected and that it could trigger
another wave of competitive devaluations.
North Korea's announcement that it had successfully tested a
hydrogen nuclear device added to geopolitical worries stirred by
a row between Saudi Arabia and Iran. The White House said
Pyongyang might not in fact have tested a hydrogen bomb, which
is much more powerful than an atomic bomb.
"It's scary when you see the second largest economy on the
planet seemingly melting down," said Brad McMillan, chief
investment officer at Commonwealth Financial in Waltham,
Massachusetts.
"There are very legitimate reasons for concerns," he said,
citing the Saudi-Iran row and the report of North Korea's
hydrogen bomb test. "You could argue the market response has
been very rational."
The Dow Jones industrial average .DJI fell 302.56 points,
or 1.76 percent, to 16,856.1, the S&P 500 .SPX lost 33.12
points, or 1.64 percent, to 1,983.59 and the Nasdaq Composite
.IXIC dropped 75.46 points, or 1.54 percent, to 4,815.97.
MSCI's World index of developed market stocks .WORLD hit a
3-month low and emerging market shares .MSCIEF were at their
lowest since mid 2009.
Nikkei futures NKc1 were down 2.7 percent and in Europe
the FTSEurofirst 300 .FTEU3 closed down 1.3 percent.
CRUDE TUMBLES
The U.S. dollar touched a near three-month low of 118.22 yen
JPY= while the euro EUR= was little changed at $1.075.
The U.S. Treasury benchmark yield hit its lowest in more
than two weeks on safe-haven demand and on signs that a lack of
inflationary pressures could slow the pace of Federal Reserve
interest rate hikes this year.
U.S. 10-year Treasury notes US10YT=RR were last up 21/32
in price to yield 2.1755 percent, from a yield of 2.25 percent
late Tuesday.
Spot gold XAU= rose 1.5 percent to $1,093.66 an ounce.
Brent crude oil prices hit new 11-year lows as the face-off
between Saudi Arabia and Iran over Riyadh's execution of a
Shi'ite cleric was seen extinguishing any chance of major
producers cooperating to cut production.
"Shale production and increasing capacity from countries
like Russia who need to protect revenue, combined with
expectations of further Iranian supply, mean actual production
as well as expectations of future production are rising," said
Michael Hewson, chief market analyst at CMC Markets.
Global benchmark Brent crude LCOc1 fell more than 6
percent to $34.15 a barrel and U.S. crude futures CLc1 were
down 5.9 percent at $33.85.
U.S. government data showing an unexpected 5.1
million-barrel fall in crude stocks last week was overshadowed
by a 10.6 million-barrel surge in gasoline supplies, the biggest
build since 1993.
The Thomson Reuters/CoreCommodity CRB index .TRJCRB hit
its lowest since August 2002.