Sentiment in stock markets took a hit Thursday as worries over the global economic recovery ratcheted up once following a surprising rise in US jobless claims, a big drop in European business sentiment and renewed concerns about Ireland's ability to ride out its financial storm. In Europe, the FTSE 100 index of leading British shares was down 67.72 points, or 1.2 percent, at 5,484.19 while Germany's DAX fell 64.98 points, or 1.1 percent, to 6,143.35. The CAC-40 in France was 52.41 points, or 1.4 percent, lower at 3,682.64. US stocks fell on Thursday after a weak reading on the labor market dropped stocks through a key technical level, validating the worries of those who thought the recent rally was flimsy. Major indexes were little changed for most of the day before the S&P 500 broke below 1,130, the high end of the summer's trading range. Thursday's volume was very light, with 7.21 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, far below last year's estimated daily average of 9.65 billion shares. The Dow Jones industrial average was down 76.89 points, or 0.72 percent, at 10,662.42. The Standard & Poor's 500 Index was down 9.45 points, or 0.83 percent, at 1,124.83. The Nasdaq Composite Index was down 7.47 points, or 0.32 percent, at 2,327.08. Adding to investor concerns, European data showed the pace of growth in the euro zone's services and manufacturing sector slowing more than expected. Existing-home sales rose in August by 7.6 percent from a 13-year low recorded in July. Modest improvements in many economic reports have driven stocks sharply higher in September. The Dow Jones industrial average rose 13 of the past 16 days, but broke a five-day winning streak on Wednesday. The Dow Jones industrial average fell 76.89, or 0.7 percent, to close at 10,662.42. The Standard and amp; Poor's 500 index fell 9.45, or 0.8 percent, to 1,124.83, while the Nasdaq composite index fell 7.47, or 0.3 percent, to 2,327.08. Falling stocks outpaced rising ones two to one on the New York Stock Exchange, where volume came to 950 million shares. Stocks in Europe were already lower after a survey showed a bigger than expected decline in business sentiment in September. The monthly purchasing managers index, or PMI - a closely watched gauge of business activity - fell to 53.8 in September from 56.2 in August. The consensus in the markets was for a far more modest decline to 55.7. Particularly worrying is that the figures showed that growth in Germany, Europe's economic powerhouse, has moderated far more rapidly than anticipated - Germany was the main driver behind the 1 percent quarterly growth posted in the eurozone in the second quarter of the year. Further concerns about the euro zone came in the bond markets, where investors sold off Irish and Portuguese debt, driving the borrowing costs of both countries to euro-era records amid continuing fears about heavy government debt levels in Europe. Ireland is a particular cause for concern at the moment after government figures showed that the economy shrank by a quarterly rate of 1.2 percent in the second quarter of the year. Unsurprisingly, the combination of waning economic growth predictions and a return of government debt issues hit the euro, which was trading 0.5 percent lower on the day at $1.3345. The euro had previously risen as much as 3 US cents after the Fed said Tuesday it is “prepared to provide additional accommodation if needed to support the economic recovery and to return inflation over time to levels consistent with its mandate.” Following that statement, the markets are now anticipating that the Fed will turn on the taps once again at its next rate-setting meeting in early November, and that the fresh supply of dollars could lead to further weakness in the currency despite the slowdown in economic growth implicit within Thursday's figures. The dollar's decline Wednesday was not just confined to the euro though. It was down another 0.3 percent at 84.32 yen, barely a yen above last week's 15-year low of 84.28 yen which prompted the Bank of Japan to intervene in the markets to stem the export-sapping appreciation of its currency. Trading in Asia earlier was subdued as many of the major markets including Japan, mainland China, Hong Kong and South Korea were closed for holidays. Among markets open in Asia, Australia's benchmark stock index closed up 0.2 percent to 4,633.6. Key indices in Thailand and the Philippines posted gains, while those in New Zealand, India and Malaysia declined. Meanwhile, New York's main contract, light sweet crude for November, rose 47 cents to $75.18 from its Wednesday price. Brent North Sea crude for delivery in November edged up 16 cents to $77.95 a barrel.
