Asian stocks fell on Monday and China's yuan hit fresh 4-1/2 year lows as plunging oil prices added to investors' nervousness about riskier assets ahead of an expected U.S. rate rise later in the week.
Spreadbetters saw the somber mood extending into Europe, forecasting Britain's FTSE.FTSE, Germany's DAX .GDAXI and France's CAC .FCHI to open flat to a touch lower.
The People's Bank of China (PBOC) on Monday continued guiding its currency lower, setting the yuan/dollar official midpoint at its weakest since July 2011. Beijing's introduction of a yuan rate index against a basket of peers - seen as a move that traders said would depeg the renminbi from the greenback over time - further weighed on the yuan.
China's decision to loosen its grip on the yuan and allow slow but steady depreciation in recent weeks had added to concerns that the economy may be more fragile than expected.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS hit a 2-1/2-month low and was last down 1.3 percent. Japan's Nikkei .N225 slumped 2.1 percent as falling commodities hit energy and trading companies' shares.
South Korea's Kospi .KS11 retreated 1.1 percent and Australian shares dropped 1.8 percent. Data on Saturday showed factory output growth in China accelerated to a 5-month high in November, while retail sales rose at an annual 11.2 percent pace - the strongest this year. ECONCN
On Friday, the Dow .DJI sank 1.8 percent and the S&P 500 .SPX lost 1.9 percent as plunging crude oil prices added to fears of a possible spike in volatility if the Federal Reserve raises interest rates on Wednesday for the first time in nearly a decade, as widely expected.
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