Global equities tumbled Friday as soaring state debts in Europe sent shivers through the markets for a second straight day and a jobs report provided a mixed picture of the US labour market.
In Paris, the CAC 40 plunged by 3.40 percent to finish at 3,563.76 while Frankfurt's Dax fell 1.79 percent to end at 5,434.34 points and London's benchmark FTSE 100 index slid 1.53 percent to close at 5,060.92 points.
The euro also took a beating, briefly falling under 1.36 dollars for the first time since May 20, 2009, before recovering in late trading, as risk-averse investors bolted for the safe-haven greenback.
"It is the same fears as yesterday," said Arnaud de Champvallier, managing director of investment firm Turgot Asset Management, referring to the concerns over the mounting debts burdens of Greece, Spain and Portugal.
"This happened despite the release of satisfying company results and reassuring comments from European leaders. But the markets do not want to hear anything," he said.
Asian shares fall as US jobs report adds to issues
Across in Asia, Tokyo plunged 2.89 percent and Hong Kong nosedived 3.33 percent on renewed concerns about battered state finances in Europe, following New York's worst finish since November.
In the United States, Wall Street wobbled after the much-awaited jobs report presented a muddled picture on the troubled labour sector that is key to a sustainable recovery from recession.
The Dow Jones Industrial Average fell 31.13 points (0.31 percent) to 9,971.05 at 1603 GMT, below the psychological 10,000 level and extending heavy day-earlier losses that had pushed the blue-chip index to a November low.
The tech-heavy Nasdaq composite rose 2.49 points (0.12 percent) to 2,127.92, while the broad-market Standard & Poor's 500 index drifted down 2.02 points (0.19 percent) to 1,061.09.
The Labor Department's January labor report showed an unexpected loss of 20,000 jobs. Most analysts had forecast a gain of 15,000.
The report also said the unemployment rate eased to 9.7 percent from 10.0 percent in December, based on a survey of households that appeared to contradict the payrolls data, but reflected in part discouraged workers leaving the labour force.
Greek debt woes spread to Iberia
European equities had plunged on Thursday as investor fears over rising debt levels in Greece began to spread to Portugal and Spain, and their stock markets fell again on Friday.
Madrid and Lisbon both fell by around 1.35 percent after sharp falls a day earlier. Greek shares took another beating, closing 3.73 percent lower.
Many countries around the world borrowed enormous amounts of money to help combat the global financial crisis and subsequent recession with emergency financial stimulus measures and banking sector bailouts.
"The real concern is that the whole 'recovery' is nothing more than poorly-directed government stimulus which has simply had the effect of boosting asset prices," GFT analyst David Morrison told AFP.
The perilous financial state of some European nations has now sparked deep concern about potential downgrades by the main ratings agencies, which would make government borrowing costs even more expensive.
"Sovereign creditworthiness shifted to the forefront of financial markets' awareness yesterday with a vengeance," said ECU Group analyst Kit Juckes.
"Fear that governments had taken on too much debt bailing out broken banks and propping up their economies was a localised problem until now -- it brought down Iceland and it sent sterling into a tailspin in 2008," he said.
"It has been a worry for Greece for weeks but it is now spreading like wildfire, driving equity markets lower, causing further concerns both about medium-term growth prospects and in currency markets."
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