World markets slide ahead of key US jobs report

[October 02, 2009]  LONDON (AP) -- World stock markets fell Friday ahead of a key U.S. jobs report due later in the day, which some fear could show unemployment nearing 10 percent rate in the world's largest economy.

Germany's DAX was down 0.5 percent at 5,525.21, Britain's FTSE 100 lost 0.5 percent to 5,021.93 and France's CAC-40 was 1.1 percent lower at 3,679.70.

Major Asian indexes in Japan and Hong Kong dropped around 2 percent or more and Wall Street was expected to open lower. Dow Jones industrials futures were down 22 points at 9,449.00 while Standard & Poor's 500 futures were 1.40 points lower at 1,026.00.

Markets fell into a bad mood on Thursday, when weekly jobless claims and monthly manufacturing data in the U.S. came in far worse than expected, raising fears that the total payrolls number for September will also be weak.

Economists expect the unemployment rate to rise slightly to 9.8 percent, from 9.7 percent in August. Employers are forecast to have cut 180,000 jobs, which would be the fewest since August 2008.

The figure is important because rising unemployment is widely seen as the biggest hindrance to a recovery in the wider economy -- American household spending accounts for more than two thirds of U.S. economic growth and 20 percent of the world economy.

"The U.S. economy is still in the doldrums," said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. "We're still not seeing a recovery in the unemployment, which means consumer spending will not recover anytime soon."

Markets will also be watching the Group of 7 meeting of finance ministers from industrialized nations in Istanbul, Turkey, for any comments about the dollar, which has weakened in recent months.

"The risk is that the rhetoric on the fringes will continue to try and talk the dollar higher," said Daragh Maher, analyst at Calyon.

He also noted that the referendum in Ireland on the Lisbon Treaty -- a set of EU reforms held back only by Ireland's vote -- will be watched closely, with the expected "yes" result likely to give the euro a boost.

Meanwhile, shares in British Airways were down 1.7 percent after EU regulators charged its one-world alliance -- with American Airlines and Iberia -- of breaking antitrust rules on trans-Atlantic routes.

In Asia, Japan's Nikkei 225 average dropped 246.77 points, or 2.5 percent, to 9,731.87, with shares of carmakers like Toyota and Nissan especially hard hit. Hong Kong's Hang Seng lost 579.96, or 2.8 percent, to 20,375.49 after being closed Thursday for a national holiday.

Elsewhere, Taiwan's index shed 1.8 percent, Australia's market lost 2.1 percent and Indonesia's benchmark was down 0.2 percent.

South Korea's market was closed for a holiday as were those in mainland China and India.

Overnight in the U.S., the Dow fell 2.1 percent to 9,509.28, its lowest close since Sept. 8.

Even with the drop, the Dow is still up 45.3 percent from a 12-year low in early March.

The broader Standard & Poor's 500 index fell 2.6 percent and the Nasdaq composite index dropped 3.1 percent.

Oil prices fell in European electronic trading, with benchmark crude for November delivery down 95 cents at $69.87. The contract added 21 cents to settle at $70.82 on Thursday.

The dollar weakened to 89.38 yen from 89.51 yen on Thursday night in New York, while the euro rose to $1.4546 from $1.4529.

[Associated Press; By CARLO PIOVANO]

Associated Press writer Jeremiah Marquez in Hong Kong contributed to this report.

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