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 Prices of both Brent and U.S. crude fell 1.8 percent, reversing a
brief rebound that helped shares in the Middle East over the
weekend, while Chinese stocks fell almost 3 percent after a weak
batch of industrial profits data.
While most bank dealing rooms in Europe were on skeleton staffing,
and London shut, that had repercussions for a range of assets,
driving the Australian and Canadian dollars down about a third of a
percent and pushing bond yields lower.
Profits at Chinese industrial companies in November fell 1.4 percent
from a year earlier, the sixth consecutive month of decline and
another sign that the world's chief engine of growth for the past
decade is sputtering.
"Over-capacity and declines in producer prices are hurting the
Chinese government efforts and if the government cannot come up with
a solution to stop this, the picture will keep on becoming more
worse," retail brokerage AvaTrade chief market analyst, Naeem Aslam,
said.
MSCI's broadest index of Asia-Pacific shares outside Japan gave up
early modest gains to fall half a percent, putting it on track for
an 11-percent loss this year.
China's two main share indexes fell 2.6 and 2.9 percent
respectively, with banking shares leading the fall. Hong Kong's Hang
Seng dropped 1 percent. South Korea's KOSPI fell 1.3 percent.
Stocks affiliated with Samsung Group fell after the South Korean
conglomerate said on Sunday its battery-making arm Samsung SDI will
sell shares in sister firm Samsung C&T Corp to comply with
regulatory requirements.
Japan's Nikkei, however, rose 0.6 percent, with soft domestic
production and retail data hinting at more pressure on the Bank of
Japan to take further steps to stimulate growth.
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International Brent crude traded at $37.26 a barrel, just over a
cent above 11-year lows hit before Christmas.
The fall in oil prices has depressed inflation globally, in turn
reducing long-term expectations for price growth that drive
longer-dated bond yields. That tends to draw investors back into
bond markets at the expense of stocks and pushes up the price of
longer-dated government bonds.
German 10-year Bund yields, which set the standard for euro zone
borrowing costs, fell 2 basis points to 0.60 percent.
"Oil prices could be part of this but it's probably just minor
trades that we're seeing here, we shouldn't read too much into it,"
Rabobank fixed income analyst, Bas van Geffen, said. "Most market
participants have already closed their books and small...(trades)
can move markets quite a lot."
(Additional reporting by Marius Zaharia and Sudip Kar-Gupta; Editing
by Louise Ireland)
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