Oil falls below $89 as stock markets drop

By Ikuko Kao

LONDON (Reuters) - Oil slid by $2 to a six-week low below $89 a barrel on Monday as stock markets fell and concern mounted over an economic slow-down led by top consumer the United States.

Stock markets across the world took a battering as anxiety spread that a fiscal stimulus plan proposed by U.S. President George W. Bush last week would not be enough to prevent a recession.

U.S. crude fell by $1.88 to $88.69 by 7:01 p.m. in electronic trade, just off a session low of $88.56, which was the lowest level since December 11.

Oil has dropped by more than 10 percent from a record high of $100.09 hit on January 3.

Floor trading on the New York Mercantile Exchange (NYMEX) is shut on Monday for the Martin Luther King Jr. holiday.

London Brent crude was down $1.61 at $87.62.

"The economic slowdown is dominating sentiment today," Tony Machacek at Bache Commodities said.

Milder-than-normal weather and costly fuel are denting demand for refined products such as heating oil and gasoline, analysts said.