Growing fears over the health of Europe’s weakest economies and the outlook for US employment rocked global markets on Thursday, sparking sharp falls in risky assets ranging from equities to oil and gold.
The rout sent investors fleeing to the safety of US government debt, boosting the dollar to its highest level against the euro in more than eight months and sending US Treasury prices higher only days after the Obama administration forecast a $1,556bn deficit for 2010.
“The risk aversion trade is back on as the debt problems of the Europe are for the first time bringing down global markets,” said Gary Jenkins, head of fixed income research at Evolution Securities in London.
The Portuguese, Spanish and Greek markets were among the hardest hit, as investor fears over their mounting public debt undermined confidence in their economies and the ability of their governments to fund burgeoning budget shortfalls.
Portugal’s stock markets fell 4.98 per cent, the biggest single day fall since November 2008. Spanish shares dropped 5.94 per cent to the lowest level since July, while Greek equities fell 3.89 per cent. More >>
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