Oil extended losses toward $111 on Tuesday after Hurricane Gustav eased before slamming into the US Gulf Coast, pushing up the US dollar to a 7-month high against the euro and causing a broad selloff of commodities. The South Korean won recovered after a steep decline on Monday, supported by the government which said in a hastily arranged meeting it had the will and ability to stop the currency from weakening.
However, stocks slipped further on fears about a flight of capital from Asia's fourth-largest economy. Economic deterioration and public unrest in the region continued to take a toll on its political establishment. Japan's unpopular prime minister resigned late on Monday, which had a limited impact on the equity and bond markets, and a state of emergency was declared in Bangkok, which weighed on the baht.
Crude's retreat, on top of a steep $4 fall on Monday, weighed on US corn and soy prices, which fell 3 percent after a US holiday on Monday. The euro was down a modest 0.1 percent at $1.4583 after earlier dipping to around $1.4555, the lowest since February 14.