Asian shares fall to 9-month low after oil prices sink

Pedestrians gaze at a share prices board in Tokyo on Dec 15, 2014. Japan's Nikkei share average fell 1.6 per cent, drawing little momentum from Japanese Prime Minister Shinzo Abe's big election victory on Sunday, which was a boost for his reflat
Pedestrians gaze at a share prices board in Tokyo on Dec 15, 2014. Japan's Nikkei share average fell 1.6 per cent, drawing little momentum from Japanese Prime Minister Shinzo Abe's big election victory on Sunday, which was a boost for his reflationary economic policies. -- PHOTO: AFP

TOKYO (Reuters) - Global shares prices came under pressure on Monday as oil prices briefly sank to fresh 5-1/2 year lows in choppy trade, doing little to allay concerns that some energy producers and exporters could find themselves in dire straits as revenues slump.

Investors were nervous after U.S. shares posted their biggest weekly fall in 2-1/2-years last week on losses led by energy sector, while they expect the U.S. Federal Reserve to hint this week it is getting closer to raising interest rates.

European shares are expected to fall further after suffering their biggest weekly loss in more than three years last week, with Britain's FTSE seen shedding as much as 1.0 per cent and France's CAC40 dropping up to 0.9 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan fell to its lowest level since March at one point, at last stood down 0.8 per cent.

Japan's Nikkei share average fell 1.6 per cent, drawing little momentum from Japanese Prime Minister Shinzo Abe's big election victory on Sunday, which was a boost for his reflationary economic policies.

Singapore's Straits Times Index was down 33.47 points, or 1 per cent, at 3,290.66 around 3pm.

U.S. crude futures fell more than 2.5 per cent at one point to as low as US$56.25 per barrel before rising back to positive territory. They were last up 1.0 per cent at US$58.40.

The world's energy watchdog late last week forecast even lower prices next year on weaker demand and increased supply, sparking a fresh waving of selling early in Asia.

Oil's relentless slide pounded stocks and currencies exposed to energy exports, dousing the appetite for riskier assets.

Energy-exporting emerging market currencies were strained, with the Brazilian real hitting a 9-1/2-year low and the Russian rouble finding an all-time low.

The Australian dollar also fell to 4 1/2-year lows with investor sentiment further damaged by a hostage crisis in Sydney.

Falls in risk asset prices are pushing investors into the safety of government debt and other traditional safe havens such as the yen.

The US dollar briefly fell to as low as 117.78 yen, edging near two-week low of a 117.445 hit last week, though the yen cut gains after the Bank of Japan's tankan corporate sentiment survey showed business sentiment at big manufacturers declined in December.

The dollar last stood at 118.56 yen, down 0.2 per cent.

Still, improving U.S. economic data has added to bets that the Federal Reserve is moving closer to raising interest rates next year.

Many investors expect that the U.S. central bank may change its vow to keep interest rates near zero for a "considerable time" when it meets for a two-day policy meeting starting on Tuesday.

That outlook is weighing on higher-yielding assets, which had attracted capital escaping low U.S. interest rates. The Indonesian rupiah fell to its lowest since August 1998 as foreign investors pull out their funds.