* MSCI world equity index down 0.4 percent at 354.73
* Oil hits new record above $141 a barrel
* Inflation fears, profit jitters hit investor sentiment
By Natsuko Waki
LONDON, June 27 (Reuters) - World stocks fell to a three-month low on Friday after a surge in oil prices above $141 a barrel and a deteriorating global inflation picture fanned concerns over the outlook for corporate profits.
Fresh data showed surging energy and other raw material costs are putting upward pressure on prices in countries from Japan to France while speculation of an imminent interest rate hike in China pushed local shares to a 16-month low.
The latest round in a global stock markets sell-off began earlier this week when Goldman Sachs urged investors to sell bank and automaker shares.
To make matters worse, oil resumed its rally to set a fresh record peak, with a deteriorating inflation picture in developed and emerging markets pressuring major central banks to raise interest rates in the face of slowing global growth.
"Every negative market factor possibly thinkable is in the picture, and with the U.S. sell-off thrown in on top of that, panic-selling has been triggered," said Oh Hyun-seok, market analyst at Samsung Securities in Seoul.
MSCI main world equity index <.MIWD00000PUS> fell 0.6 percent to its lowest since March, with the index on track for the worst monthly performance in percentage terms since September 2002, according to Reuters data.
The FTSEurofirst 300 index <
> fell 0.7 percent. Shanghai stock index < > fell more than 5 percent to the new 16-month closing low."Any remaining confidence is gone -- in the stock market at least, the crisis is worse than in Vietnam. Nobody knows what the government plans to do," said Qian Xiangjing, analyst at CITIC-Kington Securities.
Tokyo shares <
> fell more than 2 percent. On Wall Street, the Dow index fell 3 percent to a 21-month low < >.
INFLATION WORSENING
Japan's annual consumer inflation accelerated to a new decade-high of 1.5 percent in May, while a rise in French producer prices last month was its biggest since the start of the data in January 1999.
The inflation picture is worse in emerging markets, where countries like Vietnam and India are already experiencing double-digit inflation.
"The macroeconomic environment has turned far more challenging for EM policymakers. Slowing growth and accelerating inflation create a tough policy backdrop," Lehman Brothers said in a note to clients.
"Central banks are raising rates and could easily err by being too hawkish or too dovish. There is a rising risk of policy mistakes. Political pressures to intervene in markets are growing, potentially creating long-term distortions and weakening fiscal frameworks."
The European Central Bank is expected to become the first G7 central bank to raise interest rates next week, pushing the cost of borrowing to 4.25 percent.
The dollar was steady against a basket of major currencies <DXY>, having hit a 3-week low on Thursday.
"We're going to continue to see the dollar come under pressure. We're seeing signs of increased risk aversion and as we head into the quarter end, we're seeing increasing strains in the various funding markets," said David Pais, currency strategist at Citigroup.
Emerging sovereign spreads <11EMJ> tightened 3 basis points while emerging stocks <.MSCIEF> fell 1.4 percent.
The September Bund future <FGBLU8> rose 30 ticks, drawing in safe-haven funds as stocks fell.
U.S. light crude <CLc1> rose 1 percent to $141.17 a barrel.
Gold <XAU=> rose to $913.85 an ounce.
(Additional reporting by Ian Chua)