LONDON – Fears of a sharp slowdown in the world’s two largest economies,the U.S. and China, and concerns over the stability of Europe’scurrency union combined to batter global financial markets onFriday. A dismal U.S. jobs report topped off a brutal week that included areport showing China’s manufacturing sector — the backbonefor the country’s economy for years — is stagnating.Financial turmoil continued in Europe, where fears simmered thatGreece might leave the 17-country eurozone or Spain might need abailout that its European partners can scarcely afford. A government report showed U.S.
employers created just 69,000 jobsin May, the fewest in a year, while the unemployment rate rose to8.2 percent from 8.1 percent in April, the first increase in 11months. U.S. consumer spending accounts for 70 percent of the economy and afifth of world demand, so the health of the labor market is crucialfor the global economy. “May’s employment report clearly suggests that US labor marketconditions are deteriorating again,” said Paul Ashworth, chief U.S.economist at Capital Economics. He said the figures were so badthey would prompt speculation that the Federal Reserve might offernew stimulus to the U.S.
economy. In Europe, Germany’s DAX tumbled 3.4 percent to close at 6,050.29,while France’s CAC-40 lost 2.2 percent to 2,950.47 and Britain’sFTSE 100 fell 1.1 percent to 5,260.19. On Wall Street, the Dow Jones industrial average shed 1.7 percentto 12,181.57 and the S&P 500 dropped 1.9 percent to 1,285.28. The sell-off started earlier in Asia, where indexes also closedlower, after a survey showed China’s manufacturing activity hadalmost stopped growing in May. Ludacris Soul Headphones
“The (Chinese) data is so bad, and so clearly points to slowdown ofgrowth momentum, that it will likely help convince policy makersthat the economy needs more stimulus,” Dariusz Kowalczyk, senioreconomist at Credit Agricole CIB in Hong Kong, said in an email. A similar survey on Europe’s manufacturing sector was even moredownbeat, falling to 45.1 points, with the measure for Germany— which had grown steadily throughout the past two years’debt crisis — hitting a 35-month low of 45.2. Analysts said the figures suggested the region would experience aneven deeper economic downturn than previously forecast. The risingimpact on strong economies like Germany might also make them morereluctant to provide bailouts for weaker countries. China Bose Acoustic Noise Cancelling Headphones
Meanwhile, Europe’s debt crisis continued unabated, with thegovernment borrowing rates of Spain and Italy rising as topfinancial experts clamored for European leaders to take action. The head of the European Central Bank earlier this week toldEuropean Union leaders that the euro currency union isunsustainable in its current form. Along with the EuropeanCommission in Brussels, he supported the creation of a centralbanking union that might offer deposit insurance across the17-country eurozone and even bail out banks directly, bypassingnational governments. As fears of its break up grew in May, the euro fell nearly 7percent during the month but recovered 0.3 percent on Friday to$1.2397 after hitting a new two-year low earlier in the day. Sennheiser In Ear Headphone
The likelihood of Greece leaving the euro grew since May 6, whenparties opposed to the terms of the country’s financial rescue wonat the polls. New elections are planned for next month. This week, Spain became the new focus of the crisis after itsborrowing rates soared to nearly 7 percent, a level that isconsidered unsustainable for a country to continue funding itselfby selling bonds to investors. Greece, Portugal and Ireland wereforced to ask for financial aid after their rates went over 7percent. The economic outlook is more likely to worsen than improve.According to the latest official figures, unemployment in theeurozone remained at a record high of 11 percent in April, thoughit worsened in struggling countries like Spain, Portugal andGreece.
Youth unemployment in Spain hit 51.5 percent. Earlier in Asia, Japan’s Nikkei 225 index closed 1.2 percent lowerat 8,440.25 and South Korea’s Kospi dropped 0.5 percent to1,835.51. Australia’s S&P/ASX 200 index lost 0.3 percent to 4,063.90.Benchmarks in Singapore, Taiwan, Indonesia, India and New Zealandwere also lower. Hong Kong’s Hang Seng ended 0.4 percent lower at 18,558.34 afterbriefly posting gains amid hopes for stimulus measures by theChinese government. Mainland Chinese shares were flat.
Benchmark oil for July delivery slumped $2.84 to $83.69 per barrelin electronic trading on the New York Mercantile Exchange. Thecontract fell $1.29 to settle at $86.53 in New York on Thursday. The dollar fell to 78.10 yen from 78.33 yen late Thursday in NewYork. __ Pamela Sampson in Bangkok contributed to this article.