NEW YORK (Reuters) - Oil prices plummeted to $29 a barrel on Friday on the likely resumption soon of Iranian oil exports into an already flooded market as international sanctions against Iran are lifted, dragging equity indices around the world sharply lower.

People walk through the lobby of the London Stock Exchange in London, Britain August 25, 2015. REUTERS/Suzanne Plunkett

Skittish investors snapped up gold and other safe-haven assets amid fears of a global economic slowdown, coupled with concerns about a potential credit default as lower commodity prices make payments by creditors in emerging markets difficult.

Major stock indices in Europe closed down more than 2 percent, while Wall Street stock indexes tumbled even more. Global crude benchmark Brent settled below $29 a barrel, capping a 13 percent decline for the week.

“We’re seeing the final capitulation,” said Tina Byles Williams, chief investment officer at FIS Group in Philadelphia, which oversees about $4.4 billion in assets under management.

Williams said crude prices could hit $20 a barrel, a price analysts at Goldman Sachs have said may be needed to accelerate a slowdown in drilling and return global oil inventories to a supply-demand balance that would allow prices to rise.

The risk is that a creditor faced with declining revenues and higher payment costs because of a stronger dollar on its dollar-denominated debt sparks a default, Williams said.

“If that dollar-denominated debt went to finance commodity projects, then that’s obviously quite a toxic brew,” she said.

Yields on the benchmark 10-year U.S. Treasury note were poised to fall below 2 percent and gold rose as retreating oil prices and equity markets underpinned demand for assets perceived as safer. U.S. gold futures for February delivery settled up 1.6 percent at $1,090.70 an ounce.

The December futures contract on the federal funds rate surged to its highest since October, implying the Federal Reserve will raise rates only one more time this year.

In Europe, yields on euro zone debt fell as slumping oil prices eroded inflation expectations and raised the prospect that the European Central Bank will again ease monetary policy.

Minutes from the ECB’s December meeting released on Thursday showed the bank sees scope for further cuts to its deposit rate as inflation risks missing already lowered forecasts.

German 10-year yields fell 4 basis points to 0.48 percent, back to levels seen before the ECB meeting on Dec. 3 when it cut rates and extended its bond-buying scheme.

The yield on the benchmark U.S. 10-year Treasury note fell to a three-month low of 2.0295 percent.

The Australian, New Zealand and Canadian dollars all sank against the U.S. dollar on the back of another slide in Chinese stock markets and the slide in oil. But the dollar fell against both the euro and yen.

World stock markets were set for a third week of losses. European shares fell to their lowest since December 2014, hit by losses in commodity-related stocks after BHP Billiton announced a $7.2 billion write-down on its U.S. shale assets.

BHP shed 6.4 percent, one of the biggest decliners on the pan-European FTSEurofirst 300 index, which closed down 2.79 percent. MSCI’s all-country world stock index fell 2.1 percent to levels last seen in July 2013.

BROAD SELLOFF

On Wall Street, the selloff was broad, with all 10 major S&P 500 sectors in the red and all 30 components of the Dow industrials lower. A 3.8 percent slide in the beaten-down energy sector led the decline among sectors on the benchmark S&P 500.

“Investors are scared to death,” said Phil Orlando, chief equity strategist at Federated Investors in New York.

Topping investor concerns is a possible hard landing in China, the world’s second-largest economy, that drags the rest of the world into recession, Orlando said.

Other concerns include the dollar’s strength, the pace of rate increases planned this year by the Federal Reserve and a manufacturing recession, besides plunging oil prices, he said.

“It’s not giving anyone any confidence because to me at least it resembles a bad reality show on television,” he said.

The Dow Jones industrial average fell 425.72 points, or 2.6 percent, to 15,953.33. The S&P 500 slid 46.44 points, or 2.42 percent, to 1,875.4 and the Nasdaq Composite lost 144.70 points, or 3.14 percent, to 4,470.31.

Crude prices tumbled on a further decline in the Chinese stock market and as the prospect of an imminent rise in Iran’s crude exports deepened fears of a prolonged supply glut.

Both of China’s major stock indexes shed more than 3 percent, raising questions about Beijing’s ability to halt a sell-off that has now reached 18 percent since the beginning of the year.

U.S. crude futures settled down 5.7 percent at $29.42 a barrel after sliding to a low of $29.13. The March Brent contract settled 6.3 percent lower at $28.94.