Global stockmarkets continue to slide

[Gerald]

European and US shares have fallen sharply as concerns grow about eurozone debt levels and the general health of the global economy.

The main share index in Frankfurt was down 3.5%, while indexes in London and Paris dropped by about 2.5%.

In New York, stocks fell 1.2% after the release of disappointing US service sector data.

Meanwhile, the price of gold, seen as a safe investment in times of economic uncertainty, hit a new record high.

The precious metal touched $1,669 an ounce in early trading.

The Swiss National Bank also lowered its target for inter-bank lending in an attempt to lower demand for the Swiss franc, which is also seen as a safe investment and has risen sharply in recent weeks.
Cheaper oil

US markets opened lower after figures from the Institute of Supply Management suggested the country's service sector grew at its slowest pace in 17 months in July.

Separate figures from the Commerce Department showing factory orders falling in the same month contributed to the market gloom.

Oil prices also fell, with US light crude easing 88 cents to $92.91 a barrel and Brent crude dropping $1.61 to $114.85.

Earlier, Asian markets had closed lower, with Japan's Nikkei closing down 2.1% and Hong Kong's Hang Seng down 1.9%.

Government bond yields in Spain and Italy also rose, indicating a rise in the risk associated with lending to the two countries.

Figures also released on Wednesday suggested a slowdown in growth in the eurozone services sector.

The closely-watched Markit Services PMI index fell to a near two-year low of 51.6 in July, down from 53.7 in June. Any score above 50 indicates expansion.
Shifting focus

US lawmakers managed to avoid a debt default on Tuesday by raising the debt ceiling. However, analysts say there has been a sharp change in global focus from the US debt issues.

"Disappointing economic data on both sides of the Atlantic, as well as surging Italian and Spanish bond yields, has seen risk appetite plummet as pessimism about the global recovery starts to take hold with a vengeance," said Michael Hewson at CMC Markets in London.

Koichi Ono from Daiwa Securities Capital Markets in Tokyo said: "I think the conditions have completely changed this week.

"Until last week, people have been saying the US debt ceiling was the problem. Now they talk about worries about the health of the economy."

http://www.bbc.co.uk/news/business-14383704

Note: 3 August 2011 Last updated at 15:21 GMT