NEW YORK (Reuters) - Stock markets worldwide tumbled on Friday, Brent crude oil prices fell to seven-year lows and China’s yuan currency sank on risk aversion ahead of a widely anticipated U.S. interest rate increase next week and worries over economic growth.

Traders work on the floor of the New York Stock Exchange December 11, 2015. REUTERS/Brendan McDermid

The benchmark U.S. S&P 500 sank nearly 2 percent, while crude prices plunged further on a persistent global oversupply. The International Energy Agency said it sees the glut worsening in 2016 as demand slows and OPEC shows no signs of slowing production as it fights for market share.

Brent crude posted its biggest weekly percentage drop in over a year, while U.S. crude posted its biggest such decline in roughly a year.

“About 10 percent of the S&P 500 is energy and commodity related, and it is a barometer for the global economy. When you see such a plunge, it worries investors,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

China’s yuan fell to its lowest in four and a half years on concerns over a slowdown of the world’s second-biggest economy and expectations of a U.S. rate hike. Concerns grew that weakness in the yuan could weigh on the global economy.

In the spot market, the yuan CNY=CFXS hit 6.4564 against the U.S. dollar, its weakest since July 2011.

Brent crude LCOc1 settled down 4.53 percent at $37.93 a barrel after hitting $37.36, its lowest since December 2008. U.S. crude CLc1 settled down 3.10 percent at $35.62 after hitting $35.32, its lowest since February 2009.

On Wall Street, the S&P 500 posted its biggest weekly percentage drop in over three and a half months, while the other two major U.S. indexes posted their biggest weekly declines in a month.

The Dow Jones industrial average .DJI closed down 309.54 points, or 1.76 percent, at 17,265.21. The S&P 500 .SPX closed down 39.86 points, or 1.94 percent, at 2,012.37. The Nasdaq Composite .IXIC closed down 111.71 points, or 2.21 percent, at 4,933.47.

BOND PRICES, GOLD GAIN

European shares slipped to their lowest in two months, with Europe's broad FTSEurofirst 300 index .FTEU3 ending 2.14 percent lower at 1,397.49 and posting its biggest weekly drop in three and a half months.

MSCI's all-country world equity index .MIWD00000PUS, which tracks shares in 45 nations, was last down 1.6 percent, to 392.95.

The dollar fell against the euro EUR= as concerns over weak commodity prices and the yuan's slump were unsupportive of further monetary policy tightening by the Federal Reserve beyond December's heavily anticipated rate increase.

The dollar index .DXY, which tracks the greenback versus a basket of six currencies, was last down 0.39 percent, at 97.561.

U.S. Treasury debt prices surged on safe-haven demand after the drops in oil prices and equities.

“Most of this is driven by the sharp decline in oil prices given that there’s no major change in Fed expectations,” said Cheng Chen, interest rates strategist at TD Securities in New York.

U.S. 10- US10YT=RR and 30-year US30YT=RR yields hit 2.120 percent and 2.866 percent, respectively, marking their lowest in over six weeks.