London — A renewed slump in oil prices to seven-month lows dragged world stocks lower on Wednesday and flattened bond curves as bets that inflation and interest rates will stay lower for even longer began to build again. Signs of a growing glut of supply sent Brent crude futures skidding back to $45.50 a barrel as European trading gathered momentum. Poorly performing banking stocks also made for a weak start for London, Paris and Frankfurt’s stock markets. The slide in energy costs boosted bond prices and flattened yield curves as investors priced in lower inflation for longer, while safe-haven flows underpinned the Japanese yen. The spread between yields on US five-year notes and 30-year bonds shrank to the smallest since 2007 as investors wagered the Federal Reserve might have to delay further rate hikes. Thirty-year German debt yields bonds also tumbled back towards two-month lows, adding to a drop of more than 20 basis points over the past month and ahead of what will now be a c...
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