World markets close lower

Equity markets fell sharply for an eighth day today in a dizzying descent that has wiped $2.5 trillion off the value of world stocks this week and brought back memories of the 2008 financial crisis.

World leaders moved to address the turmoil, which has been driven by fears the world economy is slipping back into recession and by the inability of policy makers in Europe to extinguish the debt crisis engulfing the region.

As equity markets slid, the dollar extended losses against the Swiss franc to a fresh record low as investors sought safety in the Swiss currency. The dollar fell as low as 0.75776 Swiss francs on trading platform EBS, before pulling back slightly to 0.7589, down 0.8 per cent on the day.

China and Japan called for global cooperation and French president Nicolas Sarkozy was due to discuss the financial markets with German chancellor Angela Merkel and Spanish prime minister Jose Luis Rodriguez Zapatero.

News of stronger-than-expected US jobs growth in July assuaged some of the worst fears in markets but was not enough to spur sustained buying after an early bounce.

The dollar fell against the euro and yen, helping the euro recover from a fresh three-week low of $1.4055 hit earlier in the session.

Analysts said deep-rooted economic problems both in the United States and globally were eclipsing the jobs report.

US Treasury debt prices fell after the data, reversing some of the gains made in yesterday's panicked, risk-averse trade. The benchmark 10-year Treasury note fell 13/32 in price, its yield rising to 2.45 per cent.

The Dow Jones industrial average dropped 176.30 points, or 1.55 per cent, to 11,207.38. The Standard &Poor's 500 Index dropped 25.47 points, or 2.12 per cent, to 1,174.60. The Nasdaq Composite Index dropped 76.90 points, or 3.01 per cent, to 2,479.49.

MSCI's All-Country World Index fell 2.7 per cent, while European stocks fell 1.7 per cent.

The Dublin market has closed 1.5 per cent lower at 2506.48. London's FTSE-100 was down 2.1 per cent, Germany's DAX dropped 2.8 per cent and France's CAC 40 index slipped 1.3 per cent

European shares saw their biggest weekly decline in nearly three years today and hit their lowest in a year.

Industrial commodities were also hit. Three-month copper fell 3.6 per cent to $9,022 a tonne, the lowest since June 29th. It lost 1.9 per cent in the last session.

The Reuters-Jefferies CRB index, a global commodities benchmark, fell to a seven-month low today as raw materials markets saw one of their biggest sell-offs since the financial crisis on global economic worries.

Apart from signs that the US and global economies are weakening despite record low interest rates and the pumping of liquidity into the system, the focus was clearly on Europe, where bond yields in Spain and Italy have been blowing out, threatening the same kind of refinancing problems that have already slammed Greece, Ireland and Portugal.

The European Central Bank disappointed investors yesterday by buying Irish and Portuguese bonds but not Italian or Spanish debt.

"Would the ECB please get serious?" Berenberg private bank said in a note. "We need a circuit breaker to stop the vicious circle in which fear feeds on fear."

The ECB bought Portuguese and Irish government bonds, slightly easing pressure on Italian and other euro zone peripheral debt, which had earlier offered euro-era high premiums over less risky Germany.

But Italian 10-year government bond yields rose above their Spanish equivalent.

Italy has emerged as the market's major concern after a rescue deal that was intended to stop the spread of the crisis failed to convince investors it had the firepower to ease pressure on the vast Italian bond market.

Reuters