Investors sold equities worldwide yesterday after China's market posted its worst day in five years and oil prices fell to levels not seen since 2009.

US and European shares were down for a second day in a row, in part due to concern that the decline in oil suggested global economic weakness and as Greece's equity market slumped nearly 13 per cent on political turmoil.

Chinese shares, which had recently touched a three-and-a-half-year high, had their biggest daily per centage loss in more than five years and the yuan currency took its biggest hit against the dollar since 2008, adding to the gloom pervading emerging markets.

Brent crude, which has fallen more than 40 per cent in the last six months, slipped to a five-year low of $65.29 a barrel on worries over a supply glut before rebounding slightly. Oil prices have been under pressure as the dollar has strengthened and after the Organisation of the Petroleum Exporting Countries decided against an output cut.

Brent crude was last down 13 cents, or 0.2 per cent, at $66.06 a barrel. US crude was last down five cents, or 0.08 per cent, at $63 per barrel.

MSCI's all-country world equity index, which tracks shares in 45 nations, was last down 0.6 per cent at 419.17.

The FTSEurofirst 300 index closed down 2.32 per cent at 1,363.13.

Political unrest rose in Greece after the government brought a presidential vote forward in a political gamble that raised uncertainty over the country's transition out of its bailout.

The dollar was on track for its largest one-day loss against the yen since April, as investors booked profits and reacted to recent comments from some Federal Reserve policymakers suggesting the Fed will maintain its pledge to keep benchmark US interest rates near zero for a “considerable time”.

The Fed is to hold its last meeting of the year next week.

The drop in oil and equity markets fueled gains in safe-haven US Treasuries prices.

Long-dated US government bond yields, which move inversely to prices, fell to their lowest in roughly two months, at 2.84 per cent.

The benchmark 10-year note was last up 11/32 in price to yield 2.22 per cent.

The S&P 500 was last down 0.33 per cent at 2,053.45.

The dollar index, which tracks the greenback versus a basket of six currencies, was last down 0.52 per cent at 88.579.

Gold rose over 2 per cent and hit its highest since late October on the pullback in the dollar and equity markets.

Spot gold was last up 2.34 per cent to $1,230.90 an ounce.

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