Stock markets have fallen after a sharp decline in Chinese shares, while oil and gold prices
have increased as tensions rise in the Middle East.Trading in China's main stock markets ended
early on Monday after the indexes tumbled Europe's main stock markets followed Asia lower,
with the FTSE 100 sinking and Germany's Dax index down.Meanwhile, news that Saudi
Arabia had broken off diplomatic ties with Iran sent oil and gold prices higher.Earlier on Monday,
trading on China's Shanghai and Shenzhen stock exchanges was halted for the first time under new
"circuit breaker" rules, which are designed to curb market volatility.The share price falls came
after more signs of trouble in the world's second-largest economy.The Caixin Markit purchasing
managers' index slipped to 48.2 in December, marking the 10th consecutive month of shrinking
factory activity in the sector. A reading below 50 indicated contraction.Some analysts also
attributed the decline in share prices to the imminent end of a six-month lockup period on share
sales by major institutional investors, a policy implemented to shore up indexes. Big shareholders
may start dumping shares once the ban is lifted on Friday.Huang Cengdong, an analyst for Sinolink
Securities in Shanghai, said: "The market will not improve because there will be heavy selling in
the near future."Monday's sell-off in China had a knock-on across the region. Japan's Nikkei 225
tumbled and Hong Kong's Hang Seng retreated.Analysis: Karishma Vaswani, Asia business
correspondentThere's nothing like the herd mentality to get things started for the new year. Retail
investors in the Chinese stock market are often driven by sentiment and tend to follow the crowd.
When they hear of some bad news from brokers or their friends, and other people start selling, they
start selling too.Falling prices attract more people to dump their stocks, and although shares are
still above their lows, authorities will be keen to avoid the kind of share market crash we
saw last summer."Welcome to 2016, though you'd be forgiven for thinking the markets were
back in August 2015 with China causing some early New Year issues," said Spreadex analyst Connor
Campbell.And Alastair McCaig, market analyst at IG, said: "Anyone hitting the trading floor
expecting a calm and quiet start to 2016 was given a rude surprise as Asian chaos affected European
markets."Markets were also rattled by growing tensions between Middle East powerhouses Saudi Arabia
and Iran over the execution of Shia cleric Nimr al-Nimr.The execution in Saudi Arabia led to
protests in Tehran. Saudi has cut diplomatic ties with Iran and given diplomats 48 hours to leave.
Iran's supreme leader has warned Saudi Arabia it would face "quick consequences" for the execution.
Fearing further upheaval in the already volatile Middle East, the US has urged regional leaders to
try to ease tensions.The price of Brent crude initially rose more than on Monday, before easing
to a barrel, still up almost .The price of US crude was up more than to a barrel.
Despite the oil price rise, Bernard Aw, market strategist at IG Markets in Singapore, said global
crude oversupply would continue to weigh on prices over the longer term."Unless we see a convincing
drop in oil output from these two nations, and the broader oil-producing community, the supply glut
issue will persist, which means oil prices would remain under pressure for a longer period,
" he told the AFP news agency.Oil prices are down by two-thirds since mid-2014, with analysts
estimating that producers are pumping between 0.5 million and two million barrels of oil every day
in excess of demand.Worries about the impact of Middle East tensions were underlined in the gold
price,which rose more than 1% on Monday to $1,070.20 an ounce.Gold is frequently seen as an
alternativeinvestment during times of geopolitical and financial uncertainties. The gold price lost
10% last year.Another traditional haven is the Swiss franc, which gained about against both the
dollar and the euro in early trading on Monday.