US, Europe Markets Concern Spreads to Asia

Posted August 5th, 2011 at 10:05 am (UTC-5)
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Asian stock markets dropped sharply Friday, following Thursday’s sell-off in the United States. But major U.S. and European indexes seemed to be recovering some of their lost ground after what was seen as a positive unemployment report Friday.

The main Dow Jones Industrial Average in the United States gained almost 1 percent in Friday’s early trading, after steep losses on Thursday.

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. The economy added 117,000 new jobs last month, more than expected but still below the figure 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, to 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.

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.