LONDON: Oil prices tumbled to the lowest levels in almost seven years Monday, dragging down energy stocks, although markets overall held firm ahead of the Federal Reserve likely raising US interest rates this week.
Brent North Sea crude dived to $36.33 a barrel on Monday -- a level last seen in December 2008, while US benchmark West Texas Intermediate (WTI) slumped to $34.24 -- last witnessed in February 2009.
Stock markets in Frankfurt, London and Paris began Monday with solid gains but these mostly faded away following the latest tumble in crude oil.
"Collapsing oil prices and the potential rise in interest rates in the United States ... compounded investors' nerves," said David Papier, analyst at traders ETX Capital.
"Oil prices continued their freefall after the International Energy Agency warned that global oversupply could worsen next year."
In afternoon trading London and Paris equities showed small gains, while Frankfurt slid 0.4 percent.
The oil market, which hit similar lows on Friday, has been punished by OPEC's recent decision to maintain output despite predictions of a stubborn surplus.
Crude has slumped dramatically since the OPEC oil producers' group on December 4 opted against cutting its output levels, and there are warnings of further pain ahead as the global economy struggles.
Around 1400 GMT, Brent North Sea crude for delivery in January traded at $37.27 a barrel, down 66 cents compared with Friday's close.
WTI lost 50 cents to $35.12 a barrel.
In stock market trade, shares in energy giant Shell were down 0.6 percent at 1,445.50 pence.
Royal Dutch Shell on Monday said it planned to cut 2,800 jobs following its mega takeover of smaller rival BG Group.
Shell's £55-billion (US$84-billion, 79 billion-euros) acquisition of BG Group had already been cleared by authorities in Australia and Brazil, as well as the European Commission.
Shares in rival BP fell 0.9 percent to 334.90 pence, while in Paris shares in Total dropped 1.4 percent to 41.21 euros.
Adding to the unease on trading floors is Wednesday's Federal Reserve policy meeting that is widely expected to see US interest rates raised for the first time since 2006.
Nevertheless US stocks opened to the upside, with the major indices pushing up around 0.2 percent in the first five minutes of trading.
Asia stock markets fell on the back of the ongoing oil market rout.
Tokyo shed 1.8 percent and Hong Kong ended down 0.7 percent, while Sydney slipped two percent and Seoul gave up one percent.
However, Shanghai surged 2.5 percent as traders welcomed surprisingly strong Chinese economic data at the weekend.
Miners were also boosted by news that China's aluminium smelters pledged Friday to halt new mills.
- Key figures around 1430 GMT -
London - FTSE 100: UP 0.2 percent at 5,963.70 points
Frankfurt - DAX 30: DOWN 0.4 percent at 10,294.20
Paris - CAC 40: UP 0.07 at 4,552.84
EURO STOXX 50: DOWN 0.3 percent at 3,192.24
New York - Dow: UP 0.2 percent at 17,302.66
New York - S&P 500: UP 0.3 percent at 2,017.90
New York - Nasdaq: UP 0.2 percent at 4,944.08
Tokyo - Nikkei 225: DOWN 1.8 percent at 18,883.42 (close)
Euro/dollar: DOWN to $1.0995 from $1.0996 late in New York on Friday.
Dollar/yen: DOWN to 120.76 yen from 120.86 yen
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