World stocks slide further

Surprisingly robust US jobs data sparked only a brief rebound on Wall Street and in Europe yesterday, leaving investors scarred from a week of heavy losses brought on by slow growth and eurozone debt concerns.

European stock markets initially dived three to four per cent after heavy falls in Asia, and rally quickly lost steam following the announcement that the US economy gained a net 117,000 jobs in July.

London’s FTSE-100 index closed down 2.71 per cent to 5,246.99 points for a weekly loss of 9.8 per cent, wiping nearly £150 billion (€173 billion) off its total value over the last five days.

In Frankfurt, the DAX dropped 2.78 per cent to 6,236.16 points, dropping 13.3 percent over the week.

In Paris, the CAC-40 slid 1.26 per cent to 3,278.56 points to chalk up a record 10th consecutive daily loss. It lost 10.7 per cent over the week.

In highly volatile trading, Madrid and Milan rebounded for part of the day on rumours that that the European Central Bank was preparing to buy hard-hit Spanish and Italian bonds, before falling back.

Madrid ended the day down 0.18 per cent and dropped 10 per cent over the week, while Milan fell 0.70 per cent and lost 13.12 per cent for the week.

Wall Street also opened higher on the surprisingly strong jobs data, but the rally quickly fizzled.

The Dow Jones Industrial Average had dropped 1.9 per cent to 11,168.17 points at 1600 GMT, and was down 8.03 per cent from the previous week’s close.

The broader S&P 500 was down 2.5 per cent to 1,198.67 points, while the tech-heavy Nasdaq Composite slumped 3.4 per cent to stand at 2,470.17 points.

“The reality of a global economic contraction seems to have finally kicked in as the markets continue to plummet,” said Manoj Ladwa, senior trader at ETX Capital in London.

“Investors are pricing in a slowdown in growth and sovereign debt problems as equities drop across the board,” he added.

China said that debt-reduction announcements in Europe and the United States, where the permitted ceiling was again raised, would not be enough to save their respective economies.

“Concrete steps” must be taken to rebalance the global economy, said a commentary published by the official Xinhua news agency.

Asian stock markets closed sharply lower yesterday as already-fragile investor confidence was hammered by more weak US economic data on Thursday and a warning from the head of the European Commission that the eurozone debt crisis had spread from peripheral countries to mainstay economies such as Italy.

Tokyo tumbled 3.72 per cent, Sydney slumped 4.0 per cent and Taipei dived 5.58 per cent. Fear swept across Asia from the United States, where the Dow Jones Industrial Average on Thursday suffered its worst one-day drop since December 2008.

“We’re seeing the erosion and now the loss of confidence, confidence in the economy, confidence in the market, confidence in the policy makers. It’s all showing up,” said US-based Hugh Johnson, of Hugh Johnson Advisors.