Shares slide over oil low and Greek fears

Oil crashed to a new five-and-ahalf year low yesterday and stock markets across europe tumbled as investors head into the New Year in downbeat mood.

The price of Brent crude fell to as low as $56.74 a barrel – a level not seen since May 2009 – and has now lost more than half its value since trading above $115 just six months ago.

The latest slump in the oil price and fears about the outlook for Greece following the announcement of snap elections sent stock markets into reverse.

Greek voters go the polls on January 25 – opening the door to the radical leftwing Syriza party which is ahead in opinion polls and vows to ditch austerity.

investors fear it could end with Greece abandoning the euro, plunging the single currency bloc back into crisis.

Bank of Tokyo Mitsubishi currency strategist lee Hardman said: ‘it’s probably fair to say Greece could leave the euro. it would have less of an impact than in 2012, but would be dangerous.’

Shares in london were among those on the slide with the FTSe 100 index

‘This baleful situation not likely to change’

down 86.51 points or 1.3pc to 6547 as the Santa Rally shuddered to a halt.

The losses were echoed across europe with the French stock market down 1.68pc in Paris and the German benchmark off 1.22pc in Frankfurt.

Chris Beauchamp, a market analyst at trading firm iG in london, said: ‘if things carry on as they are it doesn’t look as if the FTSe 100 will have a particularly happy New Year period.

‘But then 2014 as a whole has been disappointing for the index, as it fell behind its peers. Other indices may have seen fresh all-time highs during the year but the FTSe 100 is still yet to revisit highs last seen in 1999.

‘as oil and mining stocks remain weak, it seems that this baleful situation is not likely to change.

‘The one bright spot on the index today has been Next, which continues to stand apart from the rest of the high street.’ Next was one of only seven stocks in the Footsie to end the day in positive territory after investors liked its Christmas trade figures.

Oil companies were among the biggest losers as the price tumbled again before recovering slightly.

But British airways owner inter- national airlines Group and easyJet followed Next higher on hopes the lower oil price will boost the firm’s profits.

Crude has been hammered on global commodity markets amid worries about the strength of demand at a time of ample supply.

The spectre of deflation is hang- ing over the eurozone, China is slowing and Japan is back in recession. George Osborne has warned that the UK cannot be ‘immune’ to developments overseas.

But it is hoped the fall in the oil price, low inflation and rising wages will boost the UK in 2015.

Tony Cross, an analyst at online trading firm Trustnet Direct, commented: ‘a degree of realism does appear to be creeping into the market with stocks across the board finding themselves under a degree of pressure.

‘Hopes that oil prices would firm have been dashed and that’s taking a toll.’