European stocks fell for a third day, led by a drop in energy shares. The Stoxx Europe 600 Index declined 0.2 per cent to 333.24 in London. The gauge lost 2.2 percent yesterday, closing down 4.8 percent from an almost seven-year high last month, amid a slump in oil-and-gas companies and growing concern over Greece as prime minister Antonis Samaras said this month's election could lead to the nation exiting the euro area.

The Euro Stoxx 50 Index of the biggest companies in the region sank 3.7 percent yesterday, the most since November 2011. The plunge in oil-and-gas companies, as well as Mr Samaras’s failure to get enough backing for his presidential candidate, leading to early elections on Janaury 25th, triggered the first December decline for the Stoxx 600 since 2008. That pared the index’s annual gain to 4.4 per cent, the smallest since 1992. That’s also pushed up a gauge of stock volatility.

Investors are also waiting for the next European Central Bank meeting on January 22nd, with speculation rising that it will push ahead with broader stimulus measures amid weak inflation numbers. December consumer prices in Germany slowed to the lowest level in more than five years, and economists estimate euro-area data tomorrow will show a decline.

Japanese stocks posted their biggest fall in nearly 10 months , as uncertainty surrounding Greece’s future in the euro zone and slumping oil prices dampened risk appetite, while a stronger yen hit exporters’ shares.

In its worst day since March 14th, the Nikkei benchmark slipped 3.0 per cent to close at 16,883.19, not far off a six-week low of 16,672.94 hit on December 17th. With oil prices at their lowest since spring 2009, the Tokyo Stock Exchange sub-index of oil and mining shares tumbled 5.5 per cent.

Inpex Corp shed 5.8 percent. Exporters' shares suffered from a stronger yen, which broke through the 119 level versus the dollar late in the session.

Nissan Motor lost 4.4 per cent and Panasonic Corp slipped 3.1 per cent. The broader Topix fell 2.9 per cent to 1,361.14, while the JPX-Nikkei Index 400 shed 2.9 per cent to close at 12,327.80.