LONDON (AP) — Stock markets dropped sharply Friday and the euro slid to a fresh four-year low against the dollar after a weaker than anticipated U.S. jobs report raised doubts about the pace of recovery in the world’s largest economy.
In Europe, the FTSE 100 index of leading British shares tumbled 73.17 points, or 1.4 percent, at 5,138.01 while Germany’s DAX sank 101.15, or 1.7 percent, to 5,953.48. The CAC-40 in France was 96.17 points, or 2.7 percent, lower at 3,461.17.
Wall Street was also poised to open way lower — Dow futures slumped 195 points, or 1.9 percent, to 10,063 while the broader Standard & Poor’s 500 futures dropped 23.60 points, or 2.1 percent to 1,080.
Those levels mark a big reversal from earlier on, when a run of strong U.S. economic data had stoked hopes about the monthly U.S. jobs data.
Though the Labor Department reported that the number of payrolls created in May was a ten-year high of 431,000, investors were expecting at least 510,000 new jobs, especially as May’s figure was inflated by the hire of 411,000 workers for the census.
That means that jobs creation remains fairly tepid in the U.S. even though the recession officially ended last year.
“This is a good reality check for where the economy really is; conditions are improving, but the recovery is still not catching fire,” said Paul Ashworth, senior U.S. economist at Capital Economics.
Friday’s jobs disappointment comes at the end of a week when stocks enjoyed some of their biggest gains this year as investors looked past the European debt crisis.
The U.S. data also had an impact in the currency markets as the prevailing appetite for risky assets unwound — at times of risk aversion, the dollar often gets supported in its presumed status as a safe haven currency.
By mid-afternoon London time, the euro was down 1 percent at $1.2047, just above its earlier low of $1.2019 — the euro has not fallen below $1.20 since March 2006.
Oil prices also fell as traders factored in a slower than anticipated U.S. economic recovery — benchmark crude for July delivery was down $1.05 at $73.56 a barrel in electronic trading on the New York Mercantile Exchange.
Elsewhere, investors are keeping a close eye on the meeting of the Group of 20 finance ministers and central bankers in South Korea, for any indications that splits have emerged about the conduct of global economic policy, now that the global recession has ended.
Gareth Berry, an analyst at UBS, said fiscal consolidation and economic growth are likely to be the key subjects for the G-20 but that “talk of financial regulation could dampen any burgeoning risk sentiment for now.”
Earlier in Asia, Japan’s Nikkei 225 stock average fell 13 points, or 0.1 percent, to 9,901.19 amid news that Finance Minister Naoto Kan had been elected prime minister, replacing the deeply unpopular Yukio Hatoyama ahead of upper house elections in July.
In Hong Kong, the Hang Seng index shed 6.64, or less than 0.1 percent, to 19,780.07 while Australia’s benchmark retreated 0.8 percent to 4,449.40. South Korea’s Kospi advanced 0.1 percent to 1,664.13 and markets in Singapore, Thailand and the Philippines also gained.
China’s Shanghai Composite Index closed flat at 2,553.59 amid concerns that rapid economic growth might slow if Europe’s debt troubles hurt demand for exports.
Associated Press researcher Bonnie Cao in Beijing contributed to this report.
