Crude rout slams stocks; safe-haven assets sought

NEW YORK (Reuters) - Oil's relentless slide pounded energy stocks and currencies exposed to crude exports on Friday, while dousing the appetite for riskier assets and encouraging investors to seek safety in core government bonds.

Major European equity indexes, some of which posted their biggest weekly losses in three years, fell more than 2 percent. Stocks on Wall Street, except for Nasdaq, fell more than 1 percent before paring some losses.

In Europe, the sell-off gathered pace in late trading.

"This is a bloodbath. After such a negative week, there's not even a rebound into the close. The fact that oil can't find a floor is spooking market players," said Saxo Bank trader Pierre Martin in Paris.

The Paris-based International Energy Agency, which coordinates the energy policies of industrialized nations, cut its demand outlook for 2015, triggering oil's collapse on Friday.

The price of Brent crude plumbed lows last seen in July 2009, with the global oil benchmark slipping below $62 a barrel on concerns over a worldwide supply glut and weak demand.

Brent prices lost nearly 11 percent for the week, pushing their slump from a June peak above $115 to almost 47 percent.

Brent fell $1.83 to settle at $61.85 a barrel, while U.S. crude settled down $2.14 to $57.81, its weakest since May 2009.

The plunge in oil prices battered currencies strongly linked to crude exports, with Norway's crown falling to an 11-year low against the U.S. dollar and the Russian ruble hitting another record low. The Canadian dollar slumped to a 5-1/2-year trough against the greenback .

"We're reaching a point where there's a risk of seeing corporate and sovereign defaults in energy-producing countries, which could revive global systemic risks," said Christophe Donay, head of strategy at Pictet, which has $441 billion in assets under management and custody.

Sovereign debt yields fell on growing concerns about disinflation as slowing European growth pushed the yield of German and U.K. government debt to record lows.

Bets increased that the European Central Bank will be forced to resort to further stimulus early next year.

German 10-year yields , the euro zone benchmark, dipped to a record low of 0.619 percent. The yield on 10-year U.S. Treasuries fell to 2.1009 percent.

"The sell-off in crude oil is really pressuring bond prices higher ... it's extremely deflationary," said Tom di Galoma, head of rates and credit trading at ED&F Man Capital Markets in New York.

U.S. stocks dipped, putting the benchmark S&P 500 on track to snap seven weeks of gains. Weak oil prices have increased worries about global demand and raised concerns about earnings for energy companies, with year-end tax selling adding pressure.

The Dow Jones industrial average fell 202.1 points, or 1.15 percent, to 17,394.24. The S&P 500 slid 17.27 points, or 0.85 percent, to 2,018.06 and the Nasdaq Composite lost 21.83 points, or 0.46 percent, to 4,686.33.

The S&P energy sector was down 1.52 percent and has shed more than 16 percent this year, making it the worst- performing of the 10 major S&P sectors. Since oil prices peaked in June, the index is down 26 percent.

MSCI's all-country world equity index fell 1.02 percent to 410.11, while the FTSEurofirst 300 index of top European shares closed down 2.63 percent at 1,321.73 in its biggest weekly loss, at 5.9 percent, since August 2011.

Britain's FTSE share index lost 2.5 percent to post its biggest weekly loss in more than three years.

The dollar cut its losses against the euro and extended gains against the yen. The dollar was up 0.34 percent against the euro at $1.2451 , and the greenback erased early losses to trade up 0.06 percent at 118.72 yen .

(Reporting by Herbert Lash; Editing by James Dalgleish and Dan Grebler)