Big gyrations mark another wild day on trading floors
European bourses post major losses as US stocks end flat
Published 06/08/2011 | 05:00
IT was another wild day on trading floors yesterday as markets gyrated around the world.
A better-than-expected US jobs report was not enough to reassure the market as stocks swung between gains and losses all day.
US stocks were marginally up by their close but European markets tumbled again as the panic continued to grip the markets.
The G7 appeared to be on the verge of an emergency summit to discuss the crisis, while the euro rose and gold weakened.
The benchmark S&P 500 swung from a loss of more than 2pc at one point to a gain of more than 1pc, before ending the day flat. It posted a weekly loss of 9.3pc.
The Dow Jones Industrial Average followed a similar trend, eventually closing the day up 0.54pc but down 7.7pc since Monday morning.
Reports that the European Central Bank had resumed buying the bonds of peripheral countries, as well as Spain and Italy, appeared to calm markets, even as rumours swept trading floors that Standard & Poors would downgrade the United States after the close.
In Europe, stocks posted their biggest weekly loss since 2008, becoming the first region to officially enter "correction" territory. "The markets want to see a solution that is sustainable in Europe," said Markus Steinbeis, head of equity portfolio management at the German unit of Pioneer Investments.
"The European Monetary Union is facing the risk of collapsing."
European stocks climbed earlier after a report showed that the US economy gained 117,000 jobs in July, more than the 85,000 expected. The unemployment rate dropped to 9.1pc as more Americans left the labour force. Economists had forecast a rate of 9.2pc.
The UK's FTSE 100 Index slid 2.7pc, Germany's DAX Index dropped 2.8pc and France's CAC 40 Index slipped 1.3pc. The FTSE finished the week 9.8pc lower while the DAX has lost nearly 13pc since last Monday.
In the currency markets the euro strengthened slightly, to $1.42 and 87p.
Yields on Irish 10-year debt fell to 9.6pc but Spanish and Italian bond yields remained over 6pc. The G7 looked set for an emergency meeting to discuss the crisis.
"Fears of an extension of the debt crisis to Spain and Italy have coupled with the US's own debt problem and, in the last few days, the additional element of worsening of the economic statistics," said Karim Bertoni at Banque SYZ in Geneva.
"If data continues to slow down, then markets will be weak."