Stocks, oil tumble as China economy concerns mount

Shares on major exchanges fell for a sixth straight day on Thursday and crude oil prices touched multi-year lows as investors fretted over the state of China's economy and its ability to stabilise its stock market.

In a move that deepened concerns over China's economic health, the People's Bank of China had set the yuan midpoint rate lower for an eighth consecutive day. The 0.5 per cent decline was the biggest between daily fixings since August.

China suspended a circuit breaker implemented at the start of 2016 that stopped trading for the day when the benchmark index fell 7 per cent, a halt already triggered twice this week. Analysts and investors said the mechanism, put in place to avoid market volatility, may have backfired.

"People see the weakness in China and in the overall equity market and think there's going to be an impact on corporations here in the United States," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

Rounding out its worst four-day start to a year in more than a century, the Dow Jones industrial average fell 392.41 points or 2.32 per cent to 16,514.1.

The S&P 500 lost 47.17 points or 2.37 per cent to 1,943.09 and the Nasdaq Composite dropped 146.34 points or 3.03 percent, to 4,689.43.

A gauge of major stock markets globally fell 2.2 per cent and Nikkei futures were down 2.6 per cent.

Currency war brewing

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 move risks triggering a cycle of competitive devaluation, said Mexican Finance Minister Luis Videgaray.

The US dollar tumbled 0.9 per cent against a basket of currencies, losing 1.4 per cent to $1.0929 versus the euro and 0.7 per cent to the yen at 117.63.

Brent crude cut a loss of more than 6 per cent to trade down 1.6 per cent, while US crude, down as much as 5.5 per cent earlier, was down 2.3 per cent.

The benchmark US Treasury yield touched its lowest since late October. US 10-year Treasury notes were last up 8/32 in price to yield 2.1491 per cent from 2.177 per cent late on Wednesday.

Gold touched $1,110 an ounce for the first time in nine weeks as the dollar fell and investors rushed into perceived havens. Spot gold rose 1.35 per cent to $1,109.10 an ounce. Its 4.6 percent gain up to Thursday was the best four-day run for gold in a year.

Copper prices touched a low not seen since May 2009.