* MSCI All World index hits 3-month low
* Wall Street set to open over 2 pct down
* China again guides yuan lower and risk sentiment suffers
* China stocks trigger circuit breaker for second time this
week
* Brent hits 11 1/2-year low as China woes add to glut
concerns
By Jemima Kelly
LONDON, Jan 7 (Reuters) - Global shares tumbled for a sixth
day on Thursday and oil prices slid to levels not seen since the
early 2000s, after China guided the yuan lower and Shanghai
shares tumbled 7 percent .CSI300 in less than half an hour.
For the second time this week, China suspended trading in
its stocks, whose losses since a turbulent start to the year
have topped 10 percent. Oil prices have plunged 12 percent since
Tuesday - the worst three-day run in a year. O/R
Brent crude skidded over 5 percent on Thursday alone to an
almost-12-year-low LCOc1 , with worries over weaker demand from
China adding to a persistent price drag caused by a huge
oversupply and near-record output levels.
Wall Street was expected to open more than 2 percent lower
ESc1 1YMc1 , following European stock markets deep into the
red. The pan-European FTSEurofirst 300 index .FTEU3 and the
euro zone's blue-chip Euro STOXX index .STOXX50E both tumbled
over 3 percent.
Even before U.S. shares began trading, MCSI's 46-country All
World index .WORLD fell 1 percent to hit a three-month low,
the sixth straight day of losses.
"When you look at the size of the moves there is certainly a
big big wave of risk off," said Vasileios Gkionakis, Global Head
of FX Strategy at UniCredit in London.
"You are looking at Chinese equities and oil down almost 12
percent in the first four trading days of the year which is
pretty chunky, and my worry is that this could create a feedback
loop which hits sentiment."
Investors remain concerned that China is struggling to keep
control of the yuan.
The People's Bank of China (PBOC) set the yuan midpoint rate
CNY=SAEC at 6.5646 per dollar, 0.5 percent weaker than the
previous day's fix. That was the biggest decline between daily
fixings since August and the eighth day in row the PBOC had set
a lower guidance rate.
The benchmark emerging stock index .MSCIEF slid 2.5
percent to a 6 1/2-year low as investors dumped risky assets.
.MSCIEF EMRG/FRX
Spot yuan CNY=CFXS fell to 6.5956 to the dollar, its
weakest since February 2011. Offshore yuan rates hit a record
low of 6.7600 to the dollar CNH= , before erasing its losses
after suspected intervention by authorities. CNY/
Other regional currencies followed the yuan down as markets
began to worry about competitive currency devaluations from
trading partners. Singapore's dollar SGD= hit a six-year low,
the South Korean won KRW= touched a four-month low, and the
Malaysian ringgit MYR= slumped to a three-month trough.
Investors fear China's economy is even weaker than had been
imagined, with Beijing, in a bid to help exporters, allowing the
yuan's depreciation to accelerate.
"The lower yuan fixing probably signifies greater risks to
the Chinese economy than we know of," said Jeremy Stretch, head
of currency strategy at CIBC World Markets.
FLIGHT TO SAFETY
North Korea's announcement on Wednesday that it had
successfully conducted a test of a hydrogen nuclear device added
to a growing list of geopolitical worries for investors.
"Geopolitical tensions stemming from Saudi-Iran tensions and
North Korea's nuclear test had already heightened the 'risk off'
mood," said Takashi Hiroki, chief strategist at Monex Securities
in Tokyo. "Resurfacing China risk was the extra psychological
blow to the markets that led to the selloff in equities."
As investors fled to safety, the yen rose about 1 percent to
117.33 per dollar JPY= , its strongest in 4 1/2 months FRX/ .
Top-rated German bonds, which are also considered a safe
haven, benefitted, too. Ten-year yields dropped to a one-month
low under 0.50 percent. GVD/EUR
Earlier, MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS dropped 2 percent to its lowest
since late September.
New rules Chinese authorities introduced this week that
restrict selling by large shareholders did not go down well with
investors and provided little tonic to jittery markets.
"This is crazy. Chinese regulators set off on this path in
July and they cannot get out of it. They have ruined whatever
hope investors still had in the market," said Alberto
Forchielli, founder of Mandarin Capital Partners in Hong Kong.