Stock markets plunged in Europe and the United States yesterday and the euro sank to a four-year low on renewed fears for the financial health of Europe and disappointing US job figures.
An announcement in Washington in the middle of the trading day in Europe that the US economy had created far fewer jobs in May than had been expected sent share prices spiralling downward.
The London FTSE 100 index shed 1.63 per cent to close at 5,126 points while in Paris the CAC 40 lost 2.86 per cent to finish at 3,455.61 points and in Frankfurt the DAX gave up 1.91 per cent to end the day at 5,938.88 points.
Elsewhere there were declines of 3.79 per cent in Milan, 3.80 per cent in Madrid and 2.20 per cent in Brussels.
On the currency market the euro tumbled under $1.20 for the first time in four years as investors fretted over the possibility of a deepening in Europe's sovereign debt crisis and its effect on eurozone growth.
The single currency in late day trade was down to $1.1972 - its lowest reading since March 24, 2006 and against $1.2158 on Thursday.
CMC Markets analyst Michael Hewson said investors were ditching euros amid a flood of negative news.
"Europe seems to be the story that keeps on giving," Mr Hewson said.
Also weighing on the euro, according to analysts, were rumours that French bank Société Générale had suffered losses in derivatives trading and comments from French Prime Minister François Fillon that the fall of the single currency was "good news", making eurozone exports more competitive.
Adding to the negative mix was news from Hungary, where Secretary of State Mihaly Varga said the public deficit would be 7.5 per cent of gross domestic product this year, nearly double the 3.8 per cent estimated by the predecessor Socialist government.
Stock markets meanwhile sagged on a report from the US Labour Department that the US economy created 431,000 non-farm jobs in May, well short of the 500,000 expected by most analysts.
The unemployment rate slipped to 9.7 per cent from 9.9 per cent in April as the labour force contracted.
"The May numbers are now a sobering reminder of the depth and severity of the labour market decline of the past two years and the lingering obstacles to growth," said Sophia Koropeckyi at Moody's Economy.com.
In Paris, analyst Christian Parisot of Aurel said the US figures were "very negative in the short term" but stressed that "growth remains solid in the United States and businesses have no reason to lay people off... even if they are not hiring in great numbers".