Global equity markets tumbled again yesterday as investors continued to worry about world growth and on fears that Europe's debt crisis was waking up from a two-year slumber, while crude oil slumped to a four-year low.

But new data indicating strength in the US economy helped major US, European and pan-world stock indexes pare losses that had exceeded one per cent earlier and cut the bid for safe-haven government debt, driving up yields.

Data showing that the number of Americans filing new claims for jobless benefits fell to a 14-year low last week and industrial output rose sharply in September also helped the dollar recover.

But the data was not enough to reverse the tide of bearish sentiment mostly based on Europe, where the outlook for slowing economic growth eroded confidence that the European Central Bank could avert another debt crisis in the eurozone.

“When you get in a mode like we are in now, where the market is clearly bearish, investors are somewhat fearful, they tend to focus more on the negatives than the positives, which is why they are ignoring this jobless claims number,” said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.

Though early reports for third-quarter US corporate results were beating expectations, earnings are backward looking and the mar-ket is always forward looking, Frederick said.

Sixty-three companies in the S&P 500 have reported results, with 65.1 per cent beating expectations, above a 20-year average but slightly lower than the past four quarters, Thomson Reuters data show. The blended revenue growth estimate is 4.1 per cent.

MSCI's all-country world index fell 0.38 per cent to 391.74, while the pan European FTSEurofirst 300 index closed down 0.49 per cent at 1,245.78.

The Dow Jones industrial average fell 66.38 points, or 0.41 per cent, to 16,075.36. The S&P 500 slid 6.49 points, or 0.35 per cent, to 1,856 and the Nasdaq Composite lost 24.18 points, or 0.57 per cent, to 4,191.14.

The dollar mostly recovered on the view that Wednesday's sell-off was overdone given the relative strength of the US economy and the Federal Reserve's commitment to tighten monetary policy.

A disappointing auction of Spanish debt and data showing that deflation hit five peripheral eurozone countries in September underscored the relative health of the US economy and the diver-gent outlook for Fed and European Central Bank policy. The euro was last down 0.20 per cent against the dollar at $1.2810. The euro hit an 11-month low against the yen, at 134.16 yen.

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