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'World stocks hit by fears over US jobs'
Published in The Egyptian Gazette on 07 - 06 - 2010

PARIS - World stock markets tumbled on Monday and the euro hit a new four-year low in the wake of poor US jobs figures and amid fresh fears that the debt crisis that began in Greece is spreading to Hungary.
The FTSE 100 index of leading British shares was down 1.2 per cent at 5,066.77 while Germany's DAX slipped 0.8 per cent to 5,889.71. The CAC-40 fell 1.3 per cent to 3,410.93.
Oil was also buffeted, falling to near $70 a barrel, while Wall Street was poised to open lower - Dow futures shed 39 points to 9,907 while the broader Standard & Poor's 500 futures dropped 4.1 points to 1,062.
"The past week's data have added to concerns that strains in the region's periphery are spreading to broader economic activity," analysts at London-based Capital Economics said in a report. "Meanwhile, fears of a meltdown in the European banking system have grown," said Jennifer McKeown, Capital Economics' senior European economist.
The selling was sparked in Asia earlier Monday on fears that Europe's debt problems could spread after a Hungarian official said last week that the nation was at risk of a Greek-style fiscal crisis. The government met over the weekend and distanced itself from the comments.
The incident, however, shocked investors and pushed the euro to a fresh four-year low against the dollar. Hungary is part of the European Union, but keeps its national currency, the forint, which dropped around five per cent last week.
"The problem seems like a cancerous thing ��" it's spreading from smaller country to smaller country, and many people are afraid that it will spread to a big country like France or Germany, although that's unlikely," said Jackson Wong, vice president at Tanrich Securities, in Hong Kong.
"We don't have major good news on the horizon. We still have crises down the road."
This week will be dominated by the European Central Bank's June meeting on Thursday. Analysts expect the bank to keep its monetary policy stance unchanged but will watch President Jean-Claude Trichet's press conference for views on the debt crisis, details on the bank's plan to buy bonds to help countries like Greece, and the outlook for growth and inflation.
"All in all the week is unlikely to see a let up in pressure on risk trades and will start much as the last week ended," said Mitul Kotecha, Credit Agricole's head of global foreign exchange strategy, in a report.
On Friday, stocks were hit by disappointing US jobs data. A government report showed the US economy created 432,000 jobs in May, far fewer than the expected 513,000. Most of the jobs were temporary hiring by the government for the US census.


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