Oil prices hit 6-1/2-year lows after Chinese stock markets suffer their biggest one-day fall since the global financial crisis, intensifying worries over the outlook for global oil demand. As Ciara Lee reports other commodities also took a battering.
It wasn't just the equity markets taking a Monday morning battering. Oil fell more than four percent to fresh 6 and a half year lows after Chinese stocks suffered their biggest one-day drop since the global financial crisis. Brent oil was trading down $1.85. And U.S. crude is now more than 17 percent below its opening price at the start of the month - the world's biggest producers still refusing to rein in output. Other commodities were hit hard too. Mike Ingram is from BGC (SOUNDBITE) (English) MARKET COMMENTATOR AT BGC, MIKE INGRAM, SAYING: "I think miners have been killed haven't they, I mean their materials were the worst performing sector 2013, 2014 and it is looking like they'll be the worst performing sector again." The scale of the problem was highlighted by losses at commodities giant Glencore. It was the biggest faller on the FTSE100, down six percent. Its shares have plummeted around 40 percent this year. Panmure Gordon's Simon French says there is still a hangover from the high levels of expansion. (SOUNDBITE) (English) SIMON FRENCH, CHIEF ECONOMIST, PANMURE GORDON, SAYING: "In terms of mining stocks, yes there are some attractive valuations out there in the market. But you would have to be a brave investor right now to get involved given there will be some pain regarding the closures and pairing back of earnings estimates over the next six to nine months." Copper and aluminum hit their lowest since 2009. And iron ore and steel futures in China slid sharply. Still hitting the bright spot though, gold remained close to a seven-week high, despite edging down slightly. It has rebounded over 7 percent this month from a 5-1/2-year low, its safehaven reputation benefitting from the turmoil.