some light reading

Oil plunged the most this year on concern that Europe's sovereign-debt crisis is deepening and as a Chinese central-bank adviser said the country's economic expansion may slow further.

Futures fell 4 per cent as the cost of insuring Spanish debt surged to a record. Greece's creditors will gather this week amid doubts that the nation will meet bailout targets. Growth in China, the second-biggest crude consuming country, may cool for a seventh straight quarter, said Song Guoqing, a member of the People's Bank of China monetary policy committee.

"Worries about the European debt crisis are overshadowing everything else," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. "The prospect of a deflationary spiral is back haunting us, especially given the signs of a Chinese slowdown. This is bad for the outlook for commodity demand, especially oil."

Crude oil for September delivery fell $US3.69 to $US88.14 a barrel on the New York Mercantile Exchange. It was the biggest decrease for a front-month contract since Dec. 14. Prices are down 11 per cent this year.

Advertisement Brent oil for September settlement declined $US3.53, or 3.3 per cent, to $US103.30 a barrel on the London-based ICE Futures Europe exchange.

Spain and Italy moved to ban short-selling of stocks as prices decreased. The euro dropped as much as 0.7 per cent to $US1.2067 today, the lowest level since June 2010. The Standard & Poor's GSCI Index of 24 commodities decreased 2.6 per cent, led by crude oil.