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 European stocks fell more than 1 percent, heading back toward
Thursday's 13-month lows, while Asian shares skidded to 3-1/2 year
lows.
Oil prices, which posted their first significant gains for 2016 on
Thursday, came under fresh selling pressure as the prospect of
additional Iranian supply loomed over the market.
Brent crude fell 3 percent to $29.86, heading for a weekly loss of
more than 10 percent. U.S. crude fared even worse, sliding almost 5
percent to $29.75, and was set for a weekly decline of 10 percent.
The collapse in oil prices has spooked financial markets as
investors worry about the health of the global economy, with a
slowdown in China and volatility in its markets making for a nervous
start to the year.
"It's been another immensely volatile week," said Philip Shaw, chief
economist at Investec in London.
 The Shanghai Composite lost 3.5 percent, while the CSI300 tumbled
3.2 percent. That put the former on track for a 9 percent loss for
the week, and the latter for a decline of 7.2 percent.
Chinese shares extended their losses after data showed new yuan
loans in December were well below the previous month's lending, and
broad M2 money supply growth also slowed, with both missing
expectations.
China will publish a host of data on Monday and Tuesday, including
fourth quarter gross domestic product.
U.S. retail sales data due later on Friday will also be on
investors' radar as they try to gauge the likelihood of the Federal
Reserve raising interest rates again in March. FEELING THE PAIN
The combination of sliding oil prices and China concerns delivered
another knock to commodity-linked currencies.
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The Canadian dollar fell to C$1.4521 against its U.S. counterpart,
its lowest level since early 2003, while the Australian dollar fell
to a seven-year low at $0.6880.
The U.S. dollar was weaker against the euro and the yen, helping
push the dollar index . down 0.18 percent to 98.895.
"It's another risk-off day," said Chris Scicluna, head of economic
research at Daiwa Capital Markets. "We had an awful session in Asia
and that has spilt over into Europe."
Worries that a depreciating Chinese yuan could spark competitive
currency devaluations across the region have also hit global shares
this month.
On Friday, the yuan, posted modest gains. That put the Chinese
currency 0.1 percent up on the week, but it was still around 1.4
percent weaker against the dollar than it started the year and has
lost nearly 5 percent since August.
The People's Bank of China set a marginally weaker midpoint of
6.5637. The spot market opened at 6.5920 per dollar and was changing
hands at 6.5858 at 4.35 a.m. ET.
(Additional reporting by Nichola Saminather and Hideyuki Sano;
Editing by Catherine Evans)
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