LONDON/HONG KONG — European stock markets fell heavily on Friday and the euro was down against the dollar, hit by growing signs that the eurozone economy may be at risk from recession and by gloom over the global outlook. London’s benchmark FTSE 100 index retreated 1.58 percent to stand at 6,330.08 points approaching midday in the British capital. Frankfurt’s DAX 30 index slumped 2.32 percent to 8,796.47 points and the CAC-40 in Paris shed 1.74 percent to 4,069.31 compared with Thursday’s closing level. Madrid lost 1.56 percent, Milan gave up 1.69 percent and Amsterdam dived 2.0 percent. All Nordic markets were down by about 2 percent. Denmark was taking the hardest hit with its main index losing 2.32 percent, compared with a 1.78-percent fall in Sweden, 2.08 percent in Norway and 2.26 percent in Finland.
“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. Asian Markets Tumble on Global Concerns Asian shares and the dollar sank Friday on growing concerns about the global economy while the head of the IMF warned the eurozone could slip into recession if governments do not act. International Monetary Fund chief Christine Lagarde said that there was a 35-40 percent chance of the eurozone slipping back into recession if action were not taken to prevent this. Investors took their lead from a heavy sell-off on Wall Street, which wiped out the previous day’s Federal Reserve-fuelled gains.
Tokyo tumbled 1.15 percent, or 178.38 points, to 15,300.55, Sydney shed 2.05 percent, or 108.38 points, to 5,188.3 and Seoul slipped 1.24 percent, or 24.33 points, to 1,940.92.
Hong Kong shed 1.90 percent, or 445.99 points, to 23,088.54 while Shanghai eased 0.62 percent, or 14.83 points, to 2,374.54. Taipei was closed for a public holiday. Markets surged after minutes released Wednesday from the Fed’s most recent meeting indicated policymakers could refrain from hiking U.S. interest rates any time soon as global economic and geopolitical woes were offsetting a domestic recovery. That came as a relief to dealers who had come to expect a rise before the bank’s mid-2015 timetable.
However, that elation was erased late Thursday after another round of negative eurozone data, including a 5.8-percent slump in German exports in August. Leading German think tanks also slashed their growth forecasts for the eurozone’s largest economy. “Overriding everything is just the concern that European growth is weak and getting weaker,” said William Lynch of Hinsdale Associates. On Wall Street the Dow tumbled 1.97 percent, the S&P 500 shed 2.07 percent and the Nasdaq sank 2.02 percent. Gold was at US$1,222.00 an ounce against US$1,230.80 late Thursday.