US, Europe Markets Concern Spreads to Asia

Posted August 5th, 2011 at 8:55 am (UTC-5)
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Asian stock markets dropped sharply Friday and major European indexes lost ground in early trading as investors worried about another world economic downturn.

In the United States, however, stock index futures pointed to a recovery of some losses on Wall Street, following a relatively positive unemployment report. On Thursday the Dow Jones Industrial Average showed its steepest drop in nearly three years.

A new U.S. government report Friday showed a slight improvement in the nation's unemployment rate for July, as it fell slightly to 9.1 percent. But the world's largest economy added only 117,000 new jobs last month, a figure far below that required for sustained economic growth.

The U.S. economy has largely stagnated this year, adding to the worries for investors already deeply concerned about the spreading debt contagion for European governments.

On Friday, Tokyo's Nikkei index closed down 3.72 percent, its lowest level in five months, and Hong Kong's Hang Seng plunged more than 4 percent.

London's major index of 100 stocks dropped nearly 2 percent in midday trading, while the Frankfurt index dipped 1.6 percent. Both recovered after news of the U.S. unemployment report.

The price of gold, a refuge for some investors in uncertain economies, climbed $4.37 to $1,650.90 an ounce, a figure near its all-time high.

In the United States on Thursday, the Dow index of 30 key stocks suffered its biggest drop since October 2008, plummeting 513 points, or 4.3 percent. Other major stock indexes, the NASDAQ and the S&P 500, also fell sharply. Financial analysts say investors are concerned the U.S. economy could be headed back into a recession.

The U.S. is the world's largest economy, but investors have voiced little confidence in the country's sluggish recovery after the agreement this week by U.S. President Barack Obama and Congress to increase the nation's borrowing limit and avoid an unprecedented default on the government's financial obligations.