Published: 31/01/2009 at 01:22 AM
London (AFP) - Stocks tumbled around the world on Friday as fresh US data showed the sharpest quarterly contraction since 1982 in the world's biggest economy and eurozone unemployment hit a two-year high.
"It has been another choppy day for equity markets,'' said Jimmy Yates, senior dealer at CMC markets in London, where the FTSE 100 index closed down 0.97% with mining and energy shares leading the fall.
The Dax index in Frankfurt dropped 2.03% and the CAC 40 in Paris dropped 1.19%, while Japan's stock market plunged 3.12% as top Japanese companies announced a raft of bad news and industrial output plunged.
The Dow Jones Industrial Average in New York fell 1.06% in early afternoon trading, while the tech-heavy Nasdaq was trading down 1.11%.
The broad-market Standard & Poor's 500 index retreated 1.34%.
The news from Washington dominated the trading day, with President Barack Obama saying that the recession data revealed a "continuing disaster'' for US workers and showed Congress must act immediately on his economic stimulus plan.
Disappearing jobs, home foreclosures and evaporating college and retirement savings are adding up to "the American dream in reverse,'' the president warned.
"The recession is deepening, and the urgency of our economic crisis is growing,'' he said.
The president spoke after the release of government data showing that the US economy contracted in the fourth quarter of 2008 at the fastest pace since 1982, with a 3.8% rate of decline.
The figure was less bad than the 5.5% drop forecast by analysts.
"Some horror-story scenarios had been priced into the markets... and we have seen an unwinding of that risk,'' said Martin Slaney, head of derivatives at financial spread-betting firm GFT Global Markets.
But Barclays Capital analyst Julia Coronado said: "On balance, the report suggests very weak momentum going into 2009 and the likelihood of significant further contraction in GDP growth.''
There were equally disturbing economic reports from Japan, where electronics giant NEC Corp. said it was slashing 20,000 jobs worldwide and Hitachi announced it would shed up to 7,000 jobs because of huge expected losses.
"The problem is very serious,'' Japan's Economics Minister Kaoru Yosano said.
"As to when the economy will bottom out, it is impossible to predict at this time as the problem is not only domestic but global.''
And in Europe, new data showed that unemployment in the countries using the euro rose in December to the highest level in more than two years, reaching a rate of 8.0% as 230,000 people lost their jobs in that month.
The AEX index in the Netherlands fell 1.49%, Italy's MIB 30 dropped 1.11%, the Ibex in Madrid slipped 0.32%. Switzerland was one of the few exceptions to the trend, with stocks inching up 0.33%
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