Markets slip on economy fears

Source: Al Jazeera
http://english.aljazeera.net/business/2010/05/20105213837710482.html


Stock markets in Europe have followed their Asian counterparts and slumped in early trade, amidst ongoing concerns about the economic recovery in the US and the stability of the euro.

Germany's DAX and the UK's FTSE 100 both opened lower on Friday, losing roughly 1 per cent of their value in early trading.

In Asia, the Nikkei - Japan's benchmark index - was down more than 2.5 per cent in late morning trading on Friday, bringing the index to a five-year low.

Taiwan's stock exchange slipped 2.6 per cent; Shanghai's main index was down more than half a per cent, though it regained ground in afternoon trading.

The poor early showing in Europe and Asia follows a rough day of trading in the United States. US markets fell sharply on Thursday, with the Dow Jones Industrial Average sliding 3.6 per cent.
The numbers partly reflect an unexpected jump in jobless claims in the United States.

US unemployment

The US labour department said on Thursday that 471,000 people applied for unemployment benefits in the week ending May 15. That was a 5.6 per cent increase from the prior week's total.

Analysts had expected the number of jobless claims to drop. Investors fear the poor showing is a bad sign for the US economic recovery.

"People believed the recovery was underway, they anticipated continuous improvements in the unemployment rate," said Steve Keen, an economics professor at the University of Western Sydney.

"But the cause of this crisis too much debt, and we still have that debt overhang... that is depressing spending," which leads to continued high levels of unemployment, he said.

Investors also continue to worry about the euro, which has reached its lowest value against the Japanese yen since November 2001. 27 European Union finance ministers are scheduled to meet in Brussels on Friday to discuss ways to strengthen their common currency.

Markets in Hong Kong and South Korea are closed on Friday because of a Buddhist holiday, and Thailand's stock market is closed because of the ongoing turmoil in Bangkok.