Global markets tumble after U.S. plunge

How low can oil prices go?

World markets tumbled Thursday, taking their lead from a sharp fall on Wall Street.

Japan's Nikkei closed down 2.7% Thursday, after plummeting as much as 4.4%. The Hang Seng in Hong Kong ended 0.6% lower, pulling back from a loss of 2.1% earlier in the day.

The declines came after a rough day of trading in U.S. markets Wednesday that brought the Dow, S&P 500 and Nasdaq into correction territory, meaning they have tumbled 10% or more from their recent peaks.

Shares in Shanghai had another volatile session Thursday, initially flirting with the lows of last summer's market crash before recovering to end the day up 2%. The Shanghai Composite has lost around 15% since the start of the year.

In Europe, both Germany's Dax and France's CAC 40 were down 3%, while the FTSE 100 fell roughly 2%.

Experts say stocks are coming under pressure from slumping oil prices and uncertainty over China's slowing economy and its weakening currency.

Related: Dow plunges 365 points on fears of oil plunge and China

For years, China's booming economy was a key engine for global growth, but now its slowdown is rippling out through global commodity markets.

Oil prices fell under $30 a barrel Tuesday for the first time in 12 years. Oil has since clawed back some ground to trade closer to $30.50.

Energy firms' shares have taken a hit, with Freeport-McMoRan (FCX) and Marathon Oil (MRO) among the worst performing stocks in the U.S. on Wednesday. Freeport nosedived 9% and Marathon plunged 7%.

Related: How low will oil prices really go?

Recent downward moves in China's currency, the yuan, against the dollar have also unsettled investors.

Trading has been more stable this week. But analysts have been left guessing over how much lower it might go and the amount of foreign reserves China could burn through in efforts to moderate the currency's decline.

"The biggest concern that we have coming into the next year is what China is doing with their currency," said Art Hogan, chief market strategist at Wunderlich Securities.

-- Patrick Gillespie contributed to this report.

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