Dubai: Plunging crude oil prices sent the world equity markets into a new tizzy on Tuesday, while rouble hit a record low on speculation of capital controls.

“We are seeing signs of disbelief over the continued speed at which crude prices have deteriorated. Funds are actively looking for a bottom in the market but so far they have failed to find it,” Ole S Hansen, head of commodity strategy at Saxo Bank told Gulf News.

Concerns about oil demand from China also weighed on prices after a report showed Chinese industrial activity shrank for the first time in seven months in December. China is the second-largest oil consumer after the United States.

Brent crude in London plunged 3.39 per cent to be at $58.99 per barrel, breaching the keenly watched $60 per barrel, a price below most Gulf government’s budgeted estimates.

Crude oil slumped about 45 per cent this year as the Organisation of Petroleum Exporting Countries sought to defend market share amid a US shale boom.

“The first and the second quarter should present the lowest price in this cycle, and we currently see the price of Brent crude averaging $65 per barrel during the first half [of 2015] followed by an annual average closer to $75 per barrel. It’s a very fluid situation currently and the expectations could easily be revalued before year-end,” said Hansen.

Slumping crude oil also weighed on investor sentiment across the globe. Emerging market stocks extended losses for a eight straight session.

Standard and Poor’s 500 index in the United States fell as much as 1.2 per cent in early hours of trade, while European equities dropped for a seventh day.

Investors are also eyeing the Federal Reserve meeting in the US.

Fed officials meeting today and tomorrow in Washington are likely to focus on a jobless rate that’s fast approaching their goal for full employment, even as declining oil prices hold inflation below their targets.

“The mood is generally bad among investors. People are fearing of a domino effect due to fall of the Rouble, which might impact the emerging markets currency,” Sebastien Henin, head of asset management, The National Investor.

The rouble hit its record low despite rate hikes by the Russian central Bank to 17 per cent from the earlier 10.5 per cent. The rouble sank as much as 19 per cent to 80.10.

“We have a complete different impact from Russia and Europe. In Russia, we may have imported inflation due to the fall in rouble, and in Europe there could be deflation due to fall in energy prices,” Henin.

Russian central bank Governor Elvira Nabiullina may resort to capital controls as she runs out of options to revive a currency wrecked by the oil-price slump and international sanctions, money managers said. The rouble has plummeted 58 per cent this year even after an 11.5 percentage-point increase in rates and interventions exceeding $80 billion.

Russia’s gross domestic product may shrink 4.5 per cent to 4.7 per cent next year if oil averages $60 a barrel under a “stress scenario,” the central bank said. Net capital outflow may reach $134 billion this year, more than double last year’s total.

Meanwhile, the euro, seen as a safe haven, rose to a three-week high of $1.2570. It was helped by data that showed Eurozone businesses were in slightly better shape in December than expected.

The yen rose nearly 1.8 per cent at one points to as high as 115.56 to the dollar, its highest in a month. The Swiss franc hit 1.20085 francs per euro, near its highest since September 2012.