The world stock market sell-off got a second wind on Thursday afternoon after disappointing US jobs data compounded investors' already bleak view of the world economy
European markets gave up early rises after the Dow Jones opened down 2.1pc following a jump in US jobless claims to 471,000. Photo: Getty
European markets gave up early rises after the Dow Jones opened down 2.1pc following a jump in US jobless claims to 471,000. Economists were expecting them to fall to 440,000.
The poor news on the US economy added to jitters about a tightening of financial regulation, pushing London's FTSE 100 down 2pc. Germany's DAX skidded 2.3pc, France's CAC 2.8pc and Spain's Ibex 1.7pc. Earlier, Asian markets fell for a second day with the Nikkei sliding 1.5pc and Australia's ASX 1.6pc.
Gilt yields on 10-year bonds fell further in the US, Germany and UK in a flight to safety.
European tensions over a unilateral German ban on the shorting of government bonds and some financials stocks on Tuesday evening continued to reverberate across financial markets.
The euro, which came off fresh four-year lows around $1.21 on Wednesday after a massive €9.5bn intervention by the Swiss central bank, remained volatile.
The currency spiked above $1.24 in early trade on speculation of a possible co-ordinated intervention from central banks, and talk that Greece may be about to leave the eurozone. This rally was short lived and it was trading around $1.2340 just before 3pm.
Angela Merkel, the German Chancellor who yesterday caused a stir by warning that the euro was in danger, today said she would campaign for a tax on financial markets at the G20 summit in Canada.
In a wide-ranging speech on financial regulation, she stressed the importance of tightening the fiscal rules governing the euro area, the breech of which has contributed to the current crisis.
"If you have a currency like the euro ... then you need stricter rules than other governments that just decide for their own currency," she said.
"We need to tighten up the Stability and Growth Pact," she insisted, ahead of a meeting of EU finance ministers and the EU president Herman van Rompuy to discuss the pact Friday in Brussels.
She also called for a European version of the rating agencies which have been accused of exacerbating the crisis.
"I would be in favour of introducing a European rating agency which would act as a competitor to other rating agencies on a level playing field," she said.
Earlier in the day investors were tempted back into the market following yesterday's steep falls. Bank shares were in demand and by 11.30am Britain's FTSE 100 was up 0.3pc, Germany's DAX had dipped 0.3pc and France's CAC-40 has gained 0.04pc.
But market watchers were wary. "The day will be a roller coaster, no doubt," said David Keeble, an analyst at Credit Agricole. "The German short ban has emphasised that Europe is not unified and this is at a juncture when it really, really needs to be."
Christine Lagarde, French Economy Minister, told RTL radio that the German decision "should have been taken in concert" with other European nations and was in itself "open to debate".
The crisis in Europe is being driven by debt and public deficit levels which have soared way above EU rules as governments increased spending to get their economies through the worst recession in decades.
French President Nicolas Sarkozy added to worries wheh he said France's constitution should be altered to compel new governments to sign up to a timetable to balance their budgets. He also said he wanted to freeze public spending for three years.
Greek authorities deployed hundreds of extra police in Athens for the fourth general strike in four months which caused widespread disruption. During Greece's last general strike on May 5, three workers — including a pregnant woman — died while trapped in a bank that rioters set ablaze.
Public anger has grown in Greece against deep pension and salary cuts, as well as steep tax hikes, imposed in an attempt to pull Greece out of an unprecedented debt crisis.
The measures were needed for Greece to receive a €110bn (£95bn) three-year rescue loan package from other EU countries and the International Monetary Fund that staved off bankruptcy.
Spain also braced for street protests by public service workers against a tough government austerity plan aimed at reining in the public deficit amid fears of a Greek-style debt crisis.
The country's main unions has called for demonstrations in front of government buildings throughout the country at the same time as the government is set to approve the belt-tightening plan later Thursday.
http://www.telegraph.co.uk/finance/markets/7745696/Poor-US-jobs-data-knocks-Wall-Street-reignites-global-stock-market-sell-off.html
http://www.telegraph.co.uk/finance/markets/7745696/Poor-US-jobs-data-knocks-Wall-Street-reignites-global-stock-market-sell-off.html
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