TEMPO.CO, London-World stocks were on the brink of a two-month low on Friday, as beaten-down oil prices and a slide in China's yuan to 4-1/2 year lows left markets in a sombre mood.

Volatile oil markets and worries about China, the world's biggest commodities consumer, have pressured many markets ahead of a widely anticipated interest rate hike by the U.S. Federal Reserve next week.

MSCI's world stock index fell for a fifth straight day as emerging markets tumbled again and European shares opened at a two-month low while the dollar steadied.

"We are in risk-off mode," said Piotr Matys, emerging market currency strategist at Rabobank in London.

"Another round of selling in commodities with oil prices at new lows has sent global stocks lower and emerging market commodity currencies are under pressure."

The Russian rouble tumbled 2 percent against the dollar, with focus on a meeting of the Russian central bank later on Friday.

Investors were also waiting for U.S. data which could cement expectations that the Fed is gearing up to hike rates for the first time in a decade next week.

U.S. retail sales, inflation and consumer sentiment data is due between 1330 GMT and 1500 GMT.

European shares fell 0.7 percent, declining for a fourth straight session, while MSCI's broadest index of Asia-Pacific shares outside Japan hit a two-month low and posted a weekly loss of just over 3 percent.

China's yuan fell to its weakest in 4-1/2 years at 6.4564 per dollar and posted its longest weekly losing streak in a decade, dragging emerging Asian currencies lower, on concerns about its slowing economy and expectations of a U.S. rate hike next week.

Lower daily fixings for the currency by China's central bank have also raised questions about how far Beijing intends to let the currency depreciate.

REUTERS