Oil rig in Chad

Global stock markets slumped on Tuesday following heavy losses across Asia and the Middle East as oil prices struck fresh five-year lows.

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

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.

After hitting its new trough at $65.29 a barrel Tuesday, Brent North Sea crude for delivery in January recovered somewhat to $65.85, down 34 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 $62.77, down 28 cents.

A stronger greenback has also weighed on demand as dollar-priced oil more expensive for buyers using weaker currencies.

– ‘Renewed worries’ –

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.

“An extended period of lower oil prices should be positive for the global economy as a whole, including key emerging economies led by China and India,” said research house Capital Economics in a commentary.

“However, we also see scope for renewed worries about the impact on the big losers, including geopolitically important economies like Russia, and on the oil industry itself.”

The stock markets of the energy-rich Gulf states took a beating as cheap oil will crimp their revenues.

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

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

The CAC 40 in Paris was particularly hard hit, losing 2.31 percent to 4,274.52 points in mid-afternoon deals.

London’s benchmark FTSE 100 index stood at 6,571.18, down 1.51 percent compared with Monday’s close, while Frankfurt’s DAX 30 lost 1.59 percent to 9,856.16 points.

“European shares are trading sharply lower… seeing some follow-through selling on the back of yesterday’s declines and very weak Chinese stock markets overnight,” said Markus Huber, senior analyst at brokers Peregrine & Black.

Greek stocks took a beating on Tuesday, plunging 12.8 percent after the government unexpectedly brought forward a high-stakes presidential vote that could call into question the recovery plan for the country which nearly caused the breakup of the euro.

Wall Street opened sharply lower, with the Dow Jones Industrial Average down 0.91 percent five minutes into trade. The broad-based S&P 500 slumped 1.00 percent and the tech-rich Nasdaq Composite Index sank 1.22 percent.

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 $1.2392 in afternoon European trading, compared to $1.2308 on Monday.

On the London Bullion Market, gold jumped to $1,206.50 an ounce from $1,193 on Monday.