European stocks hit hard by gloom over growth

LONDON, Oct 11 (AFP): A squall of alarm that the eurozone could fall into recession and by gloom over the global outlook struck European equities and the euro on Friday.
Many markets stood down by around 2.0 per cent in midday trade, but recovered some ground as Wall Street opened.
London's benchmark FTSE 100 index retreated 0.87 per cent to stand at 6,375.90 points in afternoon trading.
Frankfurt's DAX 30 index slumped 1.60 per cent to 8,860.72 points and the CAC 40 in Paris shed 0.82 per cent to 4,107 compared with Thursday's closing level.
Madrid was down 0.22 per cent, while Milan was up 0.09 per cent.
The euro dropped to $1.2634 from $1.2691 late on Thursday in New York, while global oil prices came under further pressure from weakening demand growth for crude against a backdrop of a solid supply situation.
"It now looks as though investors are nervous about a confluence of factors ranging from worries of a global economic slowdown, an economic crisis with German economic data especially poor, deflation, an unwillingness on the part of German policymakers to adopt fiscal reflation, the impact of Ebola and lurking geopolitical risks," said Neil MacKinnon, economist at VTB Capital financial group.
The slump in Europe on Friday followed a similar one in Asia and a broad two percent sell-off on Wall Street on last Thursday as the weak economic data from Germany heightened concerns about poor overseas growth.
European stock markets had already closed mostly down on last Thursday after a cut in the growth forecasts of Germany and following a fresh IMF warning on recession.
International Monetary Fund chief Christine Lagarde said that there was a 35-40-per cent chance of the eurozone slipping back into recession if action were not taken to prevent this.
In Asia on Friday Tokyo tumbled 1.15 per cent, Sydney shed 2.05 per cent and Seoul slipped 1.24 per cent.
Hong Kong shed 1.90 per cent and Shanghai eased 0.62 per cent.
US stocks opened lower on Friday as the negative sentiment from last Thursday's rout carried over with the Dow Jones Industrial Average slipping 0.04 per cent to 16,652.28 points after five minutes of trading.
The broad-based S&P 500 dropped 0.17 per cent to 1,924.88, while the tech-rich Nasdaq Composite Index fell 0.76 per cent to 4,345.08.
"Whether traders can see fit to shake off this moribund sentiment remains to be seen, but this line about Germany slipping into recession is simply layering on another level of angst to a market that is already wary of the threat posed by the likes of Ebola in West Africa and Islamic State in the Middle East," said Tony Cross, market analyst at traders Trustnet Direct.
In the currency markets, the dollar continued its climb against the euro, which had paused this week on signs that the US Federal Reserve was worried about the greenback's 10 per cent gain in value in the past five months could hurt the US economic recovery, and hence could hold back on hiking interest rates.
"Just when the dollar looked as if it was going to roll-over for a breather, better than expected claims data came along, together with further pledges from ECB President Draghi to expand stimulus measures should conditions warrant," said Simon Smith, chief economist at FxPro.
News on last Thursday that US jobless claims have fallen to an 8-year low helped reassure investors on the strength of the US recovery, and Draghi's comments reinforced that the ECB will be expanding its easy money policies.
The euro meanwhile edged up to 78.82 British pence from 78.73 pence on Thursday, while the pound fell to $1.6028 from $1.6118.
Official data on Friday showed that Britain's trade deficit for goods narrowed last month.
"The main factor behind the deficit narrowing was not an increase in exports but a large fall in imports from non-EU countries," said the Office for National Statistics.
The price of gold fell to $1,222.25 an ounce on the London Bullion Market from $1,226.75 on Thursday.
Meanwhile in the oil markets, Brent dived to a four-year low point of $88.11 a barrel in Asian trading hours, extending this week's sharp falls on global economic fears and plentiful crude supplies, analysts said.
US benchmark West Texas Intermediate (WTI) for November delivery sank to $83.59, a point last witnessed on July 3, 2012, in London trading.