World markets fall ahead of US jobs report

[September 02, 2011]  LONDON (AP) -- Global stock markets slumped Friday ahead of the release of U.S. employment figures, which will be scrutinized for clues about the state of the world's largest economy. European stocks took an extra hit from reports that international talks over Greece's economic reforms had broken down.

The U.S. Labor Department announces figures for employment and the jobless rate in August on Friday. Employers are expected to have added 93,000 jobs, not enough to dent the unemployment rate of 9.1 percent.

Fears that the U.S. economy is in danger of falling back into recession have dogged markets, though recent indicators -- including gains in auto sales, manufacturing and consumer spending -- point to steady, though not strong, growth.

On the negative side, however, consumer confidence plunged in August to a two-year low and a key category that tracks business investment plans declined 0.9 percent in July.

"This is a big number," said Jackson Wong, vice president at Tanrich Securities in Hong Kong, referring to the jobs report. "The market is still very cautious ahead of the non-farm payrolls data."

Investors watch the report as a key barometer of the health of the U.S. economy, which despite its recovery from the worst of the sub-prime mortgage crisis and the global financial meltdown has struggled to create enough jobs to sharply bring down the unemployment rate.

In Europe, concerns about the debt crisis flared up again after international debt inspectors paused their review of Greece's finances.

Greek finance chief Evangelos Venizelos denied media reports that it was due to a breakdown in talks over the country's economic reforms, insisting the pause had been scheduled.

The uncertainty, however, put extra pressure on European stock markets and the euro, which fell to $1.4243 from $1.4273 the day before.

Britain's FTSE 100 was down 1.7 percent to 5,324.43 while Germany's DAX declined 2.6 percent to 5,583.29 and France's CAC-40 shed 2.2 percent to 3,193.77.

Wall Street was set to drop on the open -- Dow futures were 0.6 percent lower at 11,392 while S&P 500 futures were down 0.7 percent at 1,192.80.

In Asia, Japan's Nikkei 225 index, Asia's biggest market, ended a six-session winning streak, falling 1.2 percent to 8,950.74. Hong Kong's Hang Seng index declined 1.8 percent to 20,212.91.

Mainland China's Shanghai Composite Index fell 1.1 percent to 2,528.28 amid concerns over the potential impact of currency appreciation.

In Seoul, South Korea's Kospi shed 0.7 percent to 1,867.75, ending six consecutive gains. Markets in Australia, New Zealand, Thailand and Singapore also fell.

Benchmarks in the Philippines and India, however, bucked the losing trend to gain less than 1 percent each.

In currencies, the dollar was steady at 76.79 yen. New Japanese Prime Minister Yoshihiko Noda named Jun Azumi, a 49-year-old former journalist, to succeed him as finance minister Friday as he launched his Cabinet. Japan, the world's third-largest economy, is struggling with the effects of a currency that remains near an all-time high against the dollar.

"We expect Noda to maintain the links he formed with the BOJ as finance minister and continue with a policy framework that includes forex market intervention," Naohiko Baba, chief economist for Goldman Sachs in Tokyo, wrote in a report Friday, referring to the new prime minister's relationship with the Bank of Japan. The central bank carries out currency market intervention on behalf of the finance ministry.

Benchmark oil for October delivery was down 81 cents to $88.12 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 12 cents to settle at $88.93 per barrel on the Nymex on Thursday.

In London, Brent crude for October delivery was down 45 cents at $113.84 on the ICE Futures exchange.

[Associated Press; By CARLO PIOVANO]

Kelly Olsen in Seoul, Yuri Kageyama in Tokyo and Fu Ting in Shanghai contributed to this report.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.