By Josie Cox 

Oil's persistent slide continued to spur global financial market losses on Friday, sending currencies in Russia and Norway to fresh multiyear lows and causing sharp losses to the major European equity indexes.

The ruble surpassed 58 against the dollar for the first time on record, while Norway's krone hit a new five-year low against the euro and an 11-year low against the dollar.

Brent crude slumped below $62 a barrel and West Texas Intermediate settled below $58--both fresh 5 1/2 year lows.

The Stoxx Europe 600 index closed the session down 2.5%, with the European subindex of oil and gas companies falling 3.6%.

London's FTSE 100, which has a very high exposure to the oil and gas sector, declined 2.5% and notched up its biggest weekly loss in around two years. However, losses were also heavy in the other core indexes, with the DAX in Frankfurt dropping 2.7% and the CAC-40 in Paris ending down 2.8%. In the U.S., the S&P 500 dropped more than 1% in late European trade.

Russia's central bank on Thursday raised its key interest rate to 10.5% from 9.5%, and its deposit rate to 9.5% from 8.5%, in an effort to halt the ruble's slide. However, economists broadly agree such a move isn't enough.

"In my view, the risk of a full-scale currency crisis is still high and the Bank of Russia may have to use all tools at its disposal to stem ruble rout," said Piotr Matys, a currency strategist at Rabobank. He said he had been expecting a 2.5-percentage-point increase in the key interest rate. "The decision taken proved insufficient."

Strategists at Sberbank also said that they weren't convinced that the rate increase would have a significant impact.

"Unless the Central Bank decides to step in with bolder actions, we wouldn't expect its policy adjustments to alter the ruble's trajectory," they write in a note.

The ruble was battered earlier this year by geopolitical conflict and resulting sanctions, but its decline has been exacerbated in recent months by the oil-price shock, especially after the 12-member Organization of the Petroleum Exporting Countries last month rejected calls for drastic action to cut their output. Around 50% of Russia's annual budget revenue stems from oil and gas exports.

Also on Thursday, Norges Bank cut its key interest rate to 1.25% from 1.5% to combat slowing domestic growth, specifically citing the tanking price of oil. Norway is Europe's biggest crude exporter and Norges Bank said that "activity in the petroleum industry is set to be weaker than projected earlier."

The negative tone was also starting to seep into the debt markets, too.

"Falling oil prices have sparked weakness in the U.S. high-yield markets, which amid thin liquidity is intensifying volatility across fixed income assets," Barclays economists wrote in a note.

Robert Montague, a senior investment analyst at ECM Asset Management, with is owned by Wells Fargo and has around $9.5bn of assets under management, says that contingent capital bonds issued by banks were starting to sell off particularly aggressively.

So-called cocos are generally considered the riskiest forms of bank debt.

The CBOE Volatility Index, commonly considered a fear gauge of financial markets, rose 8% overnight, reflecting investors' appetite for assets seen as safest during times of stress.

The yield on German 10-year government bonds hit a record low of 0.631%. Yields fall when prices rise.

Beyond oil, lasting jitters stemming from political uncertainty in Greece also pressured equities.

Earlier in the week, the Greek government announced that the parliament would vote on a new president on Dec. 17--two months ahead of schedule--to replace Karolos Papoulias, whose five-year term was slated to end in March.

The move sparked fears that Greece's radical left opposition Syriza party could win national elections if presidential voting rounds failed to find a solution acceptable to all.

"We wouldn't rule out the possibility that mainstream parties can cobble together the majority needed to win support for a presidential candidate. Nevertheless, the political outlook for Greece remains highly fraught," Citigroup economists write in a note.

Athens's main stock exchanged tumbled 7% on Thursday having already closed around 12% lower during Wednesday's session. On Friday it ended the session an additional 0.4% lower.

The yield on the country's 10-year government bond stood at 9% late Friday. Only earlier this week, it was around 7.2%.

In currency markets, the euro was around 0.6% higher against the dollar at around $1.2445, marginally higher after figures showed that factory output across the 18 countries that share the euro rose for the second straight month in October, albeit at a modest pace.

Employment and industrial production, however, remain well below their precrisis levels and there is no sign the eurozone's recovery is set to accelerate to a pace that would quickly create large numbers of new jobs, or end a long period of very low inflation.

Many analysts expect the European Central Bank to announce a government bond purchase plan to stimulate the recovery as early as Jan. 22, when it next meets. That prospect was reinforced by weak demand for the ECB's second installment of a four-year lending program for banks, results for which were published Thursday.

"Industrial confidence has improved a bit in the eurozone, however, with the economy running well below capacity and inflation likely to fall further, we continue to look for a major quantitative easing announcement in January," currency strategists at BNP Paribas wrote in a note.

They also reiterated their recommendation of selling the euro against both the U.S. dollar and the British pound.

Paul Hannon contributed to this article

Write to Josie Cox at josie.cox@wsj.com

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