Oil prices nosedived Tuesday on lower demand prospects as Europe's biggest economy Germany said it would reimpose strict coronavirus containment measures as it struggles, along with other EU nations, to roll out vaccines.

European stocks ended the day mostly lower, as did US stocks, as renewed fears of spreading Covid-19 overtook hopes of a swift reopening to the world's largest economy.

On currency markets, the Turkish lira stabilized a day after plunging in reaction to news that President Recep Tayyip Erdogan sacked the country's market-friendly central bank chief, raising concerns about another round of financial turbulence.

Germany will meanwhile enter a strict shutdown for five days over Easter amid surging virus rates, Chancellor Angela Merkel and regional leaders agreed Tuesday.

Neighbouring France should be vaccinating "morning, noon and evening", President Emmanuel Macron said as he tackles criticism that the Covid-19 immunization drive has been too slow.

France is facing a third wave of infections but is lagging behind many Western countries in terms of the number of people vaccinated.

"Oil has tumbled today over growing concerns about European demand as tighter restrictions in countries is likely to be a setback in regards to reopening their economies," said market analyst David Madden at CMC Markets UK.

He noted that little over two weeks ago crude struck 14-month highs as OPEC and its allies decided keep most of their production cuts in place.

"Now it seems that several large economies in Europe might not experience economic lift-off for a few more months, so dealers have been dumping oil as a result," he said.

Stocks prices of oil companies and airlines, which could lose the crucial summer travel season in Europe if cases continue to rise, suffered.

Across the Atlantic, the focus was on the first joint congressional testimony by Federal Reserve boss Jerome Powell and Treasury Secretary Janet Yellen.

Powell again downplayed the risk of a sustained spike in inflation, after markets were rattled by a sharp rise in US Treasury yields in recent weeks amid bets that the economic recovery forecast for this year would push prices up.

Markets fear that a spike in inflation could force the Fed to raise interest rates from their rock-bottom level, even as central bank policymakers don't expect to do so until at least 2024.

For her part, Yellen said President Joe Biden would consider raising the corporate tax rate to 28 percent and take steps to encourage US businesses to move operations into the country, as the White House eyes the price tag of a forthcoming infrastructure bill.

On markets' radars this week is the auction of seven-year US Treasuries, which will be followed closely after last month's weak sale sparked a sharp sell-off in bonds.

Jerome Powell
Jerome Powell's testimony with Janet Yellen this week will be closely watched by markets Photo: GETTY IMAGES NORTH AMERICA / ALEX WONG

That sent yields, which go in the opposite direction of prices, soaring and sparked a global market panic.

West Texas Intermediate: DOWN 6.8 percent at $57.36 per barrel

Brent North Sea crude: DOWN 6.6 percent at $60.37 per barrel

New York - Dow: DOWN 0.9 percent at 32,423.15 (close)

New York - S&P 500: DOWN 0.8 percent at 3,910.52 (close)

New York - Nasdaq: DOWN 1.1 percent at 13,227.70 (close)

EURO STOXX 50: DOWN 0.2 percent at 3,827.02 (close)

London - FTSE 100: DOWN 0.4 percent at 6,699.19 (close)

Frankfurt - DAX 30: UP less than 0.1 percent at 14,662.02 (close)

Paris - CAC 40: DOWN 0.4 percent at 5,945.30 (close)

Tokyo - Nikkei 225: DOWN 0.6 percent at 28,995.92 (close)

Hong Kong - Hang Seng: DOWN 1.3 percent at 28,497.38 (close)

Shanghai - Composite: DOWN 0.9 percent at 3,411.51 (close)

Euro/dollar: DOWN at $1.1847 from $1.1930 at 2100 GMT

Pound/dollar: DOWN at $1.3754 from $1.3862

Euro/pound: UP at 86.12 pence from 86.05 pence

Copyright AFP. All rights reserved.

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