European markets tumble amid fears on global growth
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Weaker-than-expected employment and manufacturing in the US sparked the market turmoil (Photo: Travel Aficionado)
By Honor Mahony
European markets had their biggest fall since March 2009 on Thursday (18 August) amid concerns over the state of the global economy and the ability of the eurozone to deal with its debt crisis.
London's FTSE 100 index ended the day down 4.5 percent while Germany's DAX lost 5.8 percent. US stocks were also down substantially, with the Dow Jones 3.68 percent lower at the close of day.
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The turmoil came as figures in the US showed no improvement in the employment rate and worsening manufacturing conditions in the East Coast region.
A Morgan Stanley report warning of a global economic slow down and possible recession in the US and the EU contributed to the market fears as did an article in the Wall Street Journal claiming that US regulators were examining US exposure to European banks.
Politicians on both sides of the Atlantic sought to play down fears.
"I don’t think we're in danger of another recession, but we are in danger of not having a recovery that is fast enough to deal with a genuine unemployment crisis for a whole lot of folks out there," US president Barack Obama told CBS.
"And that's why we need to be doing more."
European Council president Herman Van Rompuy on Thursday said: "We do not ... foresee negative economic growth, a recession [in Europe]."
Markets have been sceptical since a highly-anticipated meeting between eurozone heavyweights France and Germany on Tuesday (16 August) failed to deliver immediate solutions to the eurozone debt crisis, which has recently threatened to engulf Spain and Italy.
In addition, markets have also been reacting negatively to the news that Berlin and Paris want to revive the idea of a financial transaction tax and that it should apply to the whole of the EU.
