World stock markets stumbled Thursday as a surprise rise in US new jobless claims added to increasing gloom over the economic outlook, with investors looking for safety as risks to growth mount. Dealers said news that US jobless claims rose slightly, instead of falling as was expected, topped a dismal series of figures which have stoked fears that the economic recovery is in serious trouble. “Safe-haven trades are back in the ascendancy as investors increasingly fret about the outlook for the global economy,” said Nick Stamenkovic, macro strategist at RIA Capital Markets in London. Dealers said the US Federal Reserve's acknowledgement Tuesday that recovery would be weaker than anticipated sparked heavy losses worldwide on Wednesday, changing the whole tone and forcing investors onto the defensive. Slowing growth in China, the Asian powerhouse which has kept the global economy above water in the past 18 months, added to the damage. In New York, US stocks extended losses Thursday as data showing an unexpected rise in weekly jobless claims refueled recovery fears in the world's biggest economy. The Dow Jones Industrial Average dropped 58.88 points (0.57 percent) to 10,319.95 in closing trades, after losing more than one percent in early trading. . The tech-rich Nasdaq composite index slipped 18.36 points (0.83 percent) to 2,190.27 mostly on the back of Cisco System's stock falling 10 percent after presenting lower-than-expected quarterly profits. The broader S&P 500 index fell 5.86 points (0.54 percent) at 1,083.61. “There were some built-in skepticism over the market not advancing further in the month of August,” said Marc Pado, US market strategist for Cantor Fitzgerald. “The mood is a somber one as market participants adjust to a new risk profile,” analyst Kimberly DuBord of Briefing.com said in a note. US new jobless claims jumped to the highest level in about six months, coming in at 484,000 for the week to August 7 compared with analyst forecasts for 465,000. The forex markets were steadier after the dollar plunged to 15-year lows against the yen, with investors judging the Japanese unit to be a safer bet than US assets. The euro, seen as riskier and which has fallen sharply in recent days as the economic outlook darkened, found some support after the US jobless claims data dented the case for the dollar. The dollar was at 85.82 yen, up from 85.34 yen in New York late Wednesday. The euro was at $1.2861, down slightly from $1.2868 on Wednesday and compared with levels well above $1.32 earlier in the week. Gold prices hit a four-week high despite the strong dollar and two days of sharp equity market losses, which were sparked by the Federal Reserve's downgrade of its economic outlook. “With the weak job report and everything else we heard in the past couple of days, you are finding a safe-haven bid in gold,” said Fred Schoenstein, a trader at Heraeus Precious Metals Management in New York. Gold for December delivery in New York settled up $17.50, or 1.5 percent, at $1,216.70 an ounce. It was the biggest one-day percentage gain for the contract since June 7. Gold was firmer at $1,213 an ounce, up from Wednesday's $1,205.50, the traditional safe haven metal attracting modest interest. In Europe, stock markets which lost two percent and more on Wednesday closed narrowly mixed after spending much of Thursday in the red. London's FTSE 100 index of leading shares gained 0.40 percent at 5,266.06 points but in Paris, the CAC 40 slipped 0.20 percent to 3,621.07 points and in Frankfurt the DAX shed 0.31 percent at 6,135.90 points. Dealers said there was some bargain-hunting in the late afternoon to take the markets off their lows, following a similar pattern on Wall Street, but underlying sentiment has clearly taken a beating. “The global markets have taken a turn for the worse on the back of an intense escalation in risk aversion,” said Joel Kruger, currency strategist at foreign exchange site Daily FX. “Fears over the implications of a downbeat Federal reserve and signs of a dramatic slowing in the Chinese economy, weigh heavily on investor sentiment. “We believe that the risks from here are for continued downside pressure in the local markets as broader global macro uncertainty takes hold.” Elsewhere in Europe, Amsterdam dropped 0.27 percent, Madrid fell 0.31 percent and Milan slipped 0.19 percent but Brussels added 0.40 percent and Swiss stocks put on 0.22 percent. In Asian trade earlier Thursday, Tokyo was down 0.86 percent, Hong Kong dropped 0.89 percent and Shanghai and Sydney each lost 1.23 percent. Moreover, oil prices lost more ground Thursday as discouraging global economic news reinforced concerns about slowing consumer demand for energy products. Oil slid 3 percent, making its steepest three-day decline since mid-May after an unexpected rise in US jobless claims further stoked fears that a hoped-for economic recovery was unraveling. Prices vascillated with equity markets through much of the session, but ultimately ended near their lows even after equities pared losses, with some bullish investors losing faith in oil's ability to break out of its near year-long $70-85 trading range as the economic outlook darkened and fuel stocks expanded. US crude for September delivery fell 2.9 percent or $2.28, to settle at $75.74 a barrel, the lowest in a month. Prices hit session low of $75.52, the lowest since July 19, taking three-day losses to 7 percent. Trade was active, with over 800,000 lots on NYMEX crude futures for a second day running, the most in two months. Brent crude ended down $2.12 at $75.52. Gasoline pump prices have remained fairly stable as priorities shift from summer vacations to fall routines like back-to-school shopping. The national average for a gallon of unleaded gasoline was $2.776 on Thursday.
