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European and Asian shares slump US shares fall on job loss data
(about 9 hours later)
European shares have followed the lead from Asia and fallen in early trading, with investors troubled by signs that the US housing market is deteriorating. US shares fell on Friday, shadowing markets in other parts of the world, and following the release of weaker-than-expected jobs data.
London's FTSE 100 fell 1%, the Dax in Frankfurt's was down 1.1% and the Cac 40 in Paris fell 1.1% by late morning. A Labor Department report showed US employers cut 63,000 posts in February, marking the biggest monthly loss in non-farm payrolls in five years.
In Asia, Hong Kong's Hang Seng closed down 3.6% while Japan's benchmark Nikkei 225 index closed 3.3% lower. The Dow was down 1.22% at 11893.69, the Nasdaq down 0.36% at 2212.49, and the wider S&P 500 down 0.84% at 1,293.33.
The falls followed Thursday's US figures, which showed a record number of home repossessions. In Europe at close the FTSE, Cac and Dax were all down by more than 1%.
India's Sensex index shed 5% before closing 3.8% lower while Taiwan's Taiex dropped 1.47%. Exports fear
Repossessions London's FTSE 100 fell 1.15%, the Dax in Frankfurt was down 1.17% and the Cac 40 in Paris fell 1.26%.
The number of US home repossessions, and the speed at which they were being repossessed, hit record levels in the fourth quarter of 2007, figures from the Mortgage Bankers Association showed on Thursday. In Asia, Hong Kong's Hang Seng closed down 3.6%, while Japan's benchmark Nikkei-225 index closed 3.3% lower.
India's Sensex index shed as much as 5% at one point before closing 3.8% lower, while Taiwan's Taiex dropped 1.47%.
There are concerns that a US recession would hit the rest of the world.
Asia relies heavily on the US for exports, adding to fears that a slowdown would hit blue-chip firms in places including Japan.
Job losses
The jobs decline last month underscores the effect the housing and lending crisis is having on US firms, which were forced to cut 22,000 jobs in January.
The biggest employment declines were seen in the manufacturing, construction and retail sectors.
Those areas of the economy have been hardest hit by the slowdown.
The figures also showed the unemployment rate fell to 4.8% from 4.9%, when analysts had been expecting a rise to 5%.
'Abrupt softening'
ING Bank economist Rob Carnell said the data "confirmed the abrupt softening in the labour market that was strongly hinted at last month".
Meanwhile, the Fed is to increase amounts in its two Term Auction Facility auctions later in March to $50bn each, a $20bn increase from the amounts initially announced for each of these auctions.
It comes a day after the number of US home repossessions, and the speed at which they were being repossessed, hit record levels in the fourth quarter of 2007, figures from the Mortgage Bankers Association showed on Thursday.
Separate data from the Federal Reserve showed that the amount of equity Americans have in their homes has dropped below 50% for the first time since 1945.Separate data from the Federal Reserve showed that the amount of equity Americans have in their homes has dropped below 50% for the first time since 1945.
The Dow Jones Industrial Average had closed 1.75% lower on Thursday, while the Standard & Poor's 500 index shed 2.20% and the Nasdaq dropped 2.3%.
"There are still serious concerns about credit markets, particularly about where the US economy is heading," said Tony Russell, senior equities adviser at ABN AMRO Morgans in Australia.
"We're probably close to re-testing our lows seen earlier this year."
Asia relies heavily on the US for exports, adding to concerns that a slowdown would hit blue-chip firms in places including Japan. The weakening dollar compounds the problem by making local goods relatively more expensive than US items.
"If the dollar weakens further on worries over a slowdown in the US economy, investors may be buying defensive shares like food and drug shares, since exporters are not an option," said Kyoya Okazawa, who heads equity research at Credit Suisse.