Thursday, September 4, 2008

Economy worries hit world markets

US and European shares have fallen sharply on further fears over the state of the US economy and the prospect of slower growth in the Eurozone.

US shares were among those to fall sharply.

The Dow Jones and Nasdaq indexes sank by about 3% while London's FTSE 100 index lost 2.5% and German and French markets each lost close to 3%.

The slides came after US data showed sluggish shop sales and mounting unemployment claims.

The European Central Bank also cut its 2009 growth forecast from 1.5% to 1.2%.

'Little confidence'

The jitters in the US prompted by rising jobless benefit claims were added to by an ADP Employer Services report showing US private employers cut 33,000 jobs in August.

And weak sales in the closely-watched back-to-school period also caused anxiety.

"It's definitely fear of an economic downturn that's hurting us today," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

"The economic data and the downbeat forecasts from management don't lend a lot of confidence to the economic revival outlook."

On Friday, the closely watched US monthly employment report is published, with analysts expecting the US economy to have lost an additional 70,000 jobs in August, taking the yearly total over 500,000.

The Dow fell 344.65 points, 3%, to 11,188.23 points - its worst fall it had seen since late June. The Nasdaq composite index fell 74.69 points, 3.2% to 2,259.04.

In London, the falls took the FTSE 100's losses over the past two sessions to 4.6% as the economic gloom deepened.

It closed down 137.6 points at 5,362.1.

Meanwhile Germany's Dax-30 index fell 2.9% to 6,279.57 points and France's Cac-40 index lost 3.2%.

By mid-afternoon trading, the Dow Jones index was 320.38 points or 2.8% lower at 11,212.50 while the Nasdaq had lost 2.9%.

Worries about inflation have prevented central banks in the US and Europe from cutting interest rates to help forestall a slowdown.

Meanwhile, oil prices closed at their lowest level in five months as a petrol stockpiles fell by less than expected.

Light, sweet crude slipped by $1.46 to $107.89 while London Brent crude fell $1.76 to $106.30.

Source: BBC

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