LONDON – Worse than expected U.S. jobs data Friday weighed on stocks and sent the dollar tumbling as investors fretted that the U.S. economic recovery from recession is grinding to a halt.
In Europe, the FTSE 100 index of leading British shares was down 17.83 points, or 0.3 percent, at 5,347.95 while Germany%27s DAX fell 14.07 points, or 0.2 percent, to 6,319.51. The CAC-40 in France was 19.35 points, or 0.5 percent, lower at 3,744.84.
In the U.S., the Dow Jones industrial average was down 48.51 points, or 0.5 percent, at 10,626.47 soon after the open while the broader Standard & Poor%27s 500 index fell 5.59 points, or 0.5 percent, at 1,120.22.
European stocks and Wall Street futures had been trading higher before figures from the Labor Department accentuated fears that the U.S. economic recovery is slowing down faster than expected.
It revealed that U.S. employers, both public and private, shed 131,000 jobs during July, double market expectations and that June%27s 221,000 decline in payrolls was greater than initially thought. Both months have been impacted by jobs losses related to the census — there were 148,000 census-related layoffs in July.
Though the private sector added 71,000 jobs during July, the overall figures are likely to ratchet up market expectations that the U.S. Federal Reserve will announce further stimulus measures to get the world%27s largest economy back on track.
As is often the case with payrolls figures, the reaction was immediate across a range of assets.
"The report prompted a negative knee-jerk reaction in markets with the dollar under immediate pressure and the benchmark yield on U.S. government paper (10-year Treasury bills) falling around 6 basis points in the aftermath," said Simon Derrick, an analyst at Bank of New York Mellon.
By mid afternoon London time, the euro was trading 0.8 percent higher at $1.329072, just shy of its earlier high of $1.3298 — its best since May 3.
The value of the euro is not just related to the weakness of the dollar — while the dollar has been weighed down by a run of disappointing economic news, the euro has been boosted by the easing in the government debt crisis and a raft of better than expected economic data in Europe.
Meanwhile, the dollar slid 0.6 percent to 85.28 yen, its lowest level since last November.
Bank of New York Mellon%27s Derrick said there%27s every chance that the November low of 84.80 yen may represent a "line in the sand" for Japan%27s monetary authorities and that they may intervene to stem the export-sapping appreciation of the currency. Too much of an appreciation of the yen could price out the country%27s exports in the international marketplace.
The jobs data also hit oil markets, and the benchmark crude for September delivery was trading 86 cents lower at $81.15 a barrel in electronic trading on the New York Mercantile Exchange.
Earlier, Japan%27s benchmark Nikkei 225 stock index lost 0.1 percent to 9,642.12 while Hong Kong%27s Hang Seng was up 0.6 percent to 21,678.80. South Korea%27s Kospi was little changed at 1,783.83. Markets in India, Thailand and Indonesia gained while Malaysia and Singapore dropped.
However, the Shanghai Composite Index rose 1.4 percent to 2,658.39 as investors weighed how much a slowdown in government spending and tighter monetary policy could cool China%27s economic growth.
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Associated Press Writer Alex Kennedy in Singapore contributed to this report.