Asian shares fall to nine-month low as oil prices sink

By Hideyuki Sano

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 the FTSE (FTSE) seen shedding as much as 1.0 percent and France's CAC40 (FCHI) dropping up to 0.9 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) fell to its lowest level since March at one point, at last stood down 0.8 percent.

Japan's Nikkei share average (N225) fell 1.6 percent, drawing little momentum from Japanese Prime Minister Shinzo Abe's big election victory on Sunday, which was a boost for his reflationary economic policies.

U.S. crude futures fell more than 2.5 percent at one point to as low as $56.25 per barrel before rising back to positive territory. They were last up 1.0 percent at $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 dollar briefly fell to as low as 117.78 yen <USD/JPY>, 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 percent.

The dollar's index against a basket of six other major currencies stood little changed at 88.328, keeping some distance from a 5 1/2-year high of 89.550 hit a week ago.

"The risk-off sentiment may support the yen against the dollar in the next couple of days, though I do think the market will become bullish on the dollar after the Fed's meeting," said Osao Iizuka, chief dealer at Sumitomo Mitsui Trust Bank.

U.S. Treasuries also gained, with the 10-year yield slipping to a two-month low of 2.071 percent (U.S. 10-Year Bond Yield).

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.

Junk bonds were also feeling the pain with U.S. high yield bond index <.MERH0A0> falling to 10-month lows.

(Editing by Eric Meijer & Kim Coghill)