World stocks tumble as oil hits record high

By Natsuko Waki

LONDON (Reuters) - World stocks fell to a three-month low on Friday after a surge in oil prices above $141 a barrel and a deteriorating global inflation picture fanned concerns over the outlook for corporate profits.

Fresh data showed surging energy and other raw material costs are putting upward pressure on prices in countries from Japan to France while speculation of an imminent interest rate hike in China pushed local shares to a 16-month low.

The latest round in a global stock markets sell-off began earlier this week when Goldman Sachs urged investors to sell bank and automaker shares.

To make matters worse, oil resumed its rally to set a fresh record peak, with a deteriorating inflation picture in developed and emerging markets pressuring major central banks to raise interest rates in the face of slowing global growth.

"Every negative market factor possibly thinkable is in the picture, and with the U.S. sell-off thrown in on top of that, panic-selling has been triggered," said Oh Hyun-seok, market analyst at Samsung Securities in Seoul.

MSCI main world equity index fell 0.6 percent to its lowest since March, with the index on track for the worst monthly performance in percentage terms since September 2002, according to Reuters data.

The FTSEurofirst 300 index fell 0.7 percent. Shanghai stock index fell more than 5 percent to the new 16-month closing low.

"Any remaining confidence is gone -- in the stock market at least, the crisis is worse than in Vietnam. Nobody knows what the government plans to do," said Qian Xiangjing, analyst at CITIC-Kington Securities.