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Global markets reacted negatively to US data released Friday, stoking bears’ fears of a slowing economy while bolstering the hopes of investors looking for the Federal Reserve to pour more funds into the financial system.
In Asia, technology companies and carmakers were among the biggest losers, dragged down by concerns about the global economic recovery. Falling US sales weighed on Japanese carmakers, which are suffering from the yen’s strength, but South Korean carmakers were higher on the back of robust US sales.
Hong Kong’s Hang Seng index declined as banks mirrored losses in their US peers overnight.
Mainland lenders on the Shanghai exchange were also weighed down by concerns that Beijing is likely to maintain its tightening policies in the face of high inflation. Some investors are already looking ahead to August inflation figures due out next week.
In Sydney, mining companies lost ground after a fall in metals prices.
The MSCI Asia Pacific index snapped a six-day advance to drop 0.9 per cent, and Japan’s Nikkei fell 1.2 per cent. Australia’s S&P/ASX 200 index dropped 1.5 per cent.
Investors moved to lock in profits ahead of August US non-farm payrolls figures.
Germany’s Dax eroded gains from earlier in the week on Friday amid continuing worries over the eurozone economy and slowing growth in Germany.
The index, flat on the week at 5,538.33, has fallen more than 26 per cent since its peak in May, as European and US economic data that failed to meet expectations have added to concerns that the global economic recovery is at risk.
Deutsche Bank fell 4.9 per cent to €26.30 and Commerzbank dropped 5.2 per cent to €1.93.
Eon and RWE , Germany’s biggest utilities, fell 0.7 per cent to €14.32 and 1.1 per cent to €24.38, respectively.
The FTSE Eurofirst 300’s biggest riser this week was French company Bouygues , which made its largest gains in three years as it announced plans for a share buy-back. Bouygues’ stock rose 15.3 per cent to €25.61 over the week.
The vulnerable European car market fell on Thursday, headed by Fiat after Citigroup cut its rating from “buy” to “hold”.
Daimler also trailed, sinking 0.4 per cent to €34.00.
Portuguese company EDP rose 14.9 per cent to €2.47 as GDF Suez said it was considering a bid for the Portuguese government’s stake in the company.
The FTSE Eurofirst 300 index closed up 3.2 per cent over the week to 948.62.
Weak employment data and reports that a government regulator would bring mortgage-related lawsuits against US-based banks, reversed what had been a week of strong gains on Wall Street.
By Wednesday the S&P 500 index had recorded four successive days of gains for the first time since late June, and by Monday the index had closed above 1,200 for the first time since August 4. But the S&P 500 index was up only 0.5 per cent for the week at 1,183.58, far beneath the week high of 1,230 on Wednesday. Financial stocks in the index were down 0.7 per cent for the week.
The Dow Jones Industrial Average was up just 0.3 per cent for the week at 11,315.53, but the Nasdaq Composite index rose 1 per cent to 2,505.22.
US non-farm payrolls report showed zero job growth in the country’s private sector last month, undershooting expectations of about 70,000 new jobs. The previous two months’ figures were also revised lower by 58,000, adding to the general gloom.
“Employment data were weaker than expected, there is a renewed focus on Europe and this week we were again made aware of our country’s hostile regulatory environment,” said Karl Mills, chief investment officer at Jurika, Mills & Keifer. “The market also anticipates next Thursday’s speech from Barack Obama.” he said.
Bank of America, down 4.6 per cent lower for the week, was among the biggest fallers in the S&P 500.
Goldman fell 4.3 per cent for the week.
JPMorgan shares were down 3.6 per cent loss for the week.
Citigroup was down 3.2 per cent lower for the week.
Netflix fell 4.9 per cent for the week.
Meanwhile, Newmont Mining was a top performer, up 3.2 per cent for the week.
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