World markets hit by Europe economy fears, US jobs data

(LONDON) - Global stock markets fell, the euro slid to a near nine-month low and oil prices suffered as fears over European debt levels and disappointing US jobs data cast a shadow Friday across the world economy.

Asian markets had a grim day, with Tokyo stocks down 2.89 percent and Hong Kong's Hang Seng plunging 3.33 percent in panic selling, and there were also steep falls in Seoul and Sydney.

The euro slipped to 1.3639 dollars, a low last seen in May 2009, despite a temporary bounce following the US jobs figures, as investors concerned about a potential sovereign debt default in Europe fled to the safe-haven greenback.

European markets were all down. London's main FTSE index lost 1.62 percent, Frankfurt 1.29 percent, Paris 2.10 percent and Madrid 2.35 percent.

The falls accelerated Thursday's heavy losses amid mounting fears over the impact of the tattered finances of Greece, Spain and Portugal on the 16-nation eurozone.

Meanwhile in New York, stocks slid after opening in positive territory as analysts digested a Labor Department report that offered mixed signals about prospects for a sustainable recovery.

It showed the US economy shed 20,000 jobs last month but that the unemployment rate eased to 9.7 percent.

The Dow Jones Industrial Average was down 13.53 points (0.14 percent) to 9,988.65, below the psychological 10,000 level and extending Thursday's heavy losses that had brought the blue-chip index to a November low.

The tech-heavy Nasdaq composite fell 0.05 percent and the broad Standard & Poor's 500 index shed 0.15 percent.

The White House said it was encouraged by the figures, a view only partly shared by analysts.

"While unemployment remains a severe problem, today's employment report contains encouraging signs of gradual labor market healing," said White House economic advisor Christina Romer.

Wells Fargo economist Eugenio Aleman said the better than expected drop in the unemployment rate was positive.

"It's a very strong drop," Aleman said. "It's good news but I don't know if it is sustainable."

In Spain, the central bank released figures showing the country still mired in recession, with the economy shrinking 0.1 percent in the fourth quarter of 2009 and 3.6 percent for the year as a whole.

Its government last week announced plans to slash the public deficit to the EU limit of 3.0 percent of output by 2013 after it mushroomed to 11.4 percent last year.

But public debt is projected to rise from 55.2 percent of gross domestic product in 2009 to 74.3 percent in 2012, above Europe's 60-percent limit.

Prime Minister Jose Luis Rodriguez Zapatero acknowledged the pressures.

"This is not an easy moment, there are fundamental economic challenges of great magnitude for Spain and other countries" in Europe, he told reporters during a visit to Washington.

Britain's Business Secretary Peter Mandelson, whose country is not part of the eurozone, also acknowledged London was struggling with its debt burden.

In Germany, new data showed industrial production plunged 2.6 percent from December. On an annual basis, the fall was an even larger 7.1 percent.

"In difficult times like these, it is all the more important that we combine all our forces in Europe to push for additional growth impulses," German Economy Minister Rainer Bruederle told reporters.

Britain and Germany recently crawled out of recession but the recovery seen in most major economies remains delicate.

Greece has been placed under unprecedented EU surveillance as it attempts austerity measures to slash its massive debt and 12.7-percent public deficit, while Portugal's deficit hit 9.3 percent last year, its highest since 1974.

In London trading, New York's main futures contract, light sweet crude for delivery in March, lost 34 cents to 72.80 dollars a barrel after having fallen nearly four dollars on Thursday.

London's Brent North Sea crude for March fell 69 cents to 71.44 dollars.

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