Shares fall on oil drop, Greek political turmoil

Investors sold equities worldwide on Tuesday after China's market posted its worst day in five years and oil prices fell to levels not seen since 2009.

U.S. and European shares were down for a second day in a row, in part due to concern that the decline in oil suggested global economic weakness and as Greece's equity market slumped nearly 13 percent on political turmoil.

Chinese shares, which had recently touched a three-and-a-half-year high, had their biggest daily percentage loss in more than five years and the yuan currency CNY= took its biggest hit against the dollar since 2008, adding to the gloom pervading emerging markets.

Brent crude, which has fallen more than 40 percent in the last six months, slipped to a five-year low of $65.29 a barrel on worries over a supply glut before rebounding slightly. Oil prices have been under pressure as the dollar has strengthened and after the Organization of the Petroleum Exporting Countries decided against an output cut.

"To some extent, a drop in oil prices of course is positive, but there comes a point at which people begin to be concerned whether the drop is too much, too fast and can there be unintended consequences of it," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

Brent crude LCOc1 was last down 13 cents, or 0.2 percent, at $66.06 a barrel. U.S. crudeCLc1 was last down 5 cents, or 0.08 percent, at $63 per barrel.

MSCI's all-country world equity index .MIWD00000PUS, which tracks shares in 45 nations, was last down 0.6 percent at 419.17. The FTSEurofirst 300 index .FTEU3 closed down 2.32 percent at 1,363.13.

Political unrest rose in Greece after the government brought a presidential vote forward in a political gamble that raised uncertainty over the country's transition out of its bailout.

The dollar was on track for its largest one-day loss against the yen JPY= since April, as investors booked profits and reacted to recent comments from some Federal Reserve policymakers suggesting the Fed will maintain its pledge to keep benchmark U.S. interest rates near zero for a "considerable time." The Fed is to hold its last meeting of the year next week.

The drop in oil and equity markets fueled gains in safe-haven U.S. Treasuries prices. Long-dated U.S. government bond yields, which move inversely to prices, fell to their lowest in roughly two months, at 2.84 percent. The benchmark 10-year note US10YT=RR was last up 11/32 in price to yield 2.22 percent.

The S&P 500 .SPX was last down 0.33 percent at 2,053.45.

The dollar index .DXY, which tracks the greenback versus a basket of six currencies, was last down 0.52 percent at 88.579.

Gold rose over 2 percent and hit its highest since late October on the pullback in the dollar and equity markets. Spot gold XAU= was last up 2.34 percent to $1,230.90 an ounce.