- Stocks in Europe and Asia experience heavy losses on Friday
- The US adds 117,000 new jobs in July, more than expected
- EU commissioner Olli Rehn tries to reassure markets on Spain and Italy
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Hello, and welcome to our live coverage of the ongoing sell-off in stock markets across the world.
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In the late morning, stocks continue to be in the red. The UK's FTSE 100 index is down 2.8%, or 151 points, to 5,241.67. My colleague Dominic Laurie informs me that the index was higher at the end of January 1998 than it is right now.
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Across Europe, stocks were also much lower. German shares dropped 2.6%, down for the eighth day in a row. Stocks in France are lower for the 10th day.
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emails: I've been investing in stocks and bonds for years now. This panic is, to those who recognise it, a blessing in disguise. Not only are share values at an artificially low price but the exchange rate between the dollar and the pound is very volatile. This is giving me an almost guaranteed return. Others are worried while I'm cashing in.
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But stocks in Spain and Italy turned positive in volatile trading. Rumours were swirling that the European Central Bank might buy their bonds - after the Belgian central bank head suggested that it was a possibility.
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emails: For the past few years trillions have been invested in global economies - where did the money go? Sovereign debt is just the tip of the iceberg. We haven't even got around to all the trillions of global credit card debit that exist out there. Economies can't grow if Joe public doesn't have any money to spend. It's not rocket science.
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Just like the awakening in 2007 to the idea that many of the housing loans and associated financial products were worthless, so there is a growing fear that a number of financially overstretched governments, especially in the eurozone, will not be able to repay their debts in full.
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With the prime minister and his deputy away on holiday, the most senior government minister in the UK is William Hague. "We're constantly monitoring the situation and we're in close touch with our European and American counterparts. The chancellor and the prime minister are getting constant updates," the foreign secretary said.
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We understand the Chancellor George Osborne, who is on holiday in the US, is planning to speak to the governor of the Bank of England Mervyn King, the EU Economic and Monetary Affairs commissioner Olli Rehn and other European figures by the end of the day.
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In what may be a significant move, the EU's economic affairs commissioner Olli Rehn told BBC radio that it will release a report later this year on the possibility of issuing eurobonds - that is, debt backed by all 17 countries rather than individual nations.
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A reminder: the gap between Spanish and Italian bonds and German debt - the safest in Europe - hit a record again on Friday. They are the riskiest they have ever been since the euro was created in 1999.
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In a press conference happening right now, the EU's economic affairs commissioner Olli Rehn says: "The political will to defend the euro should not be underestimated."
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The EU's Mr Rehn is talking about the latest 109bn-euro rescue package for Greece, which expands the mechanism to help other eurozone members: "We need to adapt our crisis management tools to be effective."
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"I'm confident that once investors understand all the work underway, behind the scenes, they will be reassured," Mr Rehn says.
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The EU's latest rescue package will be ready "in weeks, not months," Mr Rehn says.
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emails: The situation appears never-ending and one asks what it takes for those responsible to realise and digest what is happening to us all right now.
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Finally turning to Italy and Spain, Mr Rehn says: "The recent market unrest is simply not justified on the grounds of economic fundamentals."
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Gordon Brown,
writing in the Huffington Post, is hugely pessimistic about the eurozone's ability to sort this crisis. Brown says that the eurozone summit on Greece's latest bailout will be seen as a "huge missed opportunity, the turning point at which history failed to turn".
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emails: This share sell-off will lead to a downtrend in various sectors, like real estate and banks. People will lose jobs. People will choose to sit on their cash.
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By the way, stocks are down about 6% in the US since the Smurfs movie ("A Magical Smurf Adventure") was released on 29 July. Coincidence?
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Worth reminding everyone that the big economic news of the day comes - at 13:30 BST - from the US, where high joblessness has hampered the recovery. Analysts expect the US to have added 85,000 jobs last month, but the unemployment rate to remain at 9.2%.
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Stocks update: The FTSE is down 2.3%, or 123 points, to 5,270.32. German stocks fell 2%, while shares in Paris are down 0.6%.
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Stocks update: Stocks in Madrid and Milan are still higher. In Spain, they are now up 1.3% - quite the turnaround.
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Stocks update: South Africa's benchmark index is also down 2%. This rout is truly global.
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All those red numbers on stock market boards may appear to be a mysterious mix of data to many. The BBC's personal finance reporter Kevin Peachey
explains how the market turmoil could affect you.
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Iran's state-owned English-language news channel Press TV reported on the financial crisis this morning, laying the blame at the door of the US. According to BBC Monitoring, the channel said "the terrible behaviour of Barack Obama and the members of Congress over not being able to do anything about the deficit were now obvious to most of the world".
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Business editor for
The Sun, Steve Hawkes, blogs: "Fright was written all over the faces of people at a Lloyds Bank press briefing yesterday - displaying the mood of much of the financial world. But markets - and the mood - can turn in an instant and it's easy to overdo the gloom."
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RBS has seen its shares recover quite significantly off its lows this morning. They are now down 2.2%, compared to as much as 12.5% earlier.
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emails: For too long the US could not get its act together regarding finance - politics was getting in the way. Whilst in the UK we are taking this debt crisis seriously, elsewhere in the EU governments are pandering to the unions.
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With less than half an hour to go before the US payrolls data, a reminder that June's figure - 18,000 jobs created - was the fewest added in nine months.
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And something that will surprise many: S&P 500 futures have now turned positive, indicating that US stocks may open higher.
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emails: I really do wish that financial journalists would stop talking up yet another financial crisis. The hyping up of the banking crisis by the media did nothing but encourage a sell-off of banking stock making the situation far, far worse.
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It is almost time for non-farm payrolls, which is the formal name of the US monthly jobs data.
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The US adds 117,000 new jobs in July, compared to 18,000 added in the previous month. Analysts had expected 85,000 new jobs last month.
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The US unemployment rate has also dropped to 9.1%, from 9.2%.
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Right. So US stock futures have rallied - up 1.4% - after the US jobless figures. This suggests a positive US stocks open in less than an hour.
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emails: I am an ordinary person, with few savings but money to get by. Unfortunately, this means little to me, apart from the fact that "markets" are "afraid". It seems - once again - our lives are in the hands of detached traders and bankers.
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Stocks update: Shares across Europe, already coming off lows, were boosted by the US data. The FTSE is down just 1%, compared to its low of 3.5%.
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Stocks update: Meanwhile across the channel, German shares have also recovered a bit - down 0.9%. Stocks in Paris have turned higher, now up 1.1% and Madrid is up 1.6%.
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Now, the eyes of everyone are on the open of US trading in just over half an hour. A positive open - after the worst fall in three years on Thursday - should lift stocks across Europe.
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I try to improve my French by following a couple of blogs with new words everyday. Today's bon mot? Haletant, meaning "breathless" or "suspenseful". Appropriate.
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"Fears over the eurozone debt crisis have sent markets into free fall over the last few days, and although recently announced US employment data may give markets some short-term reprieve, these fears are likely to continue," according to the think-tank Open Europe.
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Moments before the US opens for trading, let's quickly turn to their neighbours in the north. Canada's unemployment rate eased slightly, to 7.2%, and the economy added 7,100 jobs - less than expected.
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At the open, the Dow Jones industrial average rose 1.4% to 11,537.32.
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Stocks update: Following that strong US open, Germany's Dax has turned flat. The FTSE index is now down only 0.4%... perhaps with a view to turning positive very soon.
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As markets recover, the euro has extended gains against the dollar. The euro rose as high as $1.42250 - but it is still down 1% since last week.
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emails: When are the markets going to wake up and pay attention? They are not "reacting" to perceived problems, they are causing them by their negative behaviour.
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Stocks update: Looks like the impact of the better-than-expected US jobs figures was short lived as markets head south again. The Dow Jones is flat on the day, with London's FTSE down 2.3%. Frankfurt's Dax is down a similar amount, while Paris's Cac 40 remains in positive territory, for now.
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Wall Street gives up early gains, with some European markets turning negative again.
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It seems the see-saw of the past few hours is going to persist. Spain, whose shares shrugged off negative feelings for much of the late morning, is now flat - and threatening to head lower.
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Perhaps, after having survived the onslaught of the Smurfs movie, investors are now bracing themselves for the release of the new Jim Carrey vehicle, Mr Popper's Penguins?
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Another French phrase for the day: "Quelle mouche te pique?" Meaning, what's up with you? The perfect thing to ask traders in Paris, whose stocks have been all over the place.
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A small measure of good news for the beleaguered Greeks. Taxi drivers across the country have ended a nearly three-week protest - against reforms imposed as part of the bailout - that heavily hit the tourist sector.
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Another positive that may have been missed earlier from the US jobs data: The counts for May and June were revised to show 56,000 more jobs added than previously reported.
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The dollar has hit a fresh all-time low against the Swiss franc - to 0.75776 Swiss francs per US dollar - as investors sought safety in the traditional safe haven. (I'm proud to say that was our first use of that phrase today.)
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writes: We have experienced periods of boom and bust but nothing in comparison to the situation now. This uncertainty is endangering jobs. We need stability. Our problems have been further complicated by credit rating agencies downgrading economies and making the situation even more precarious.
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William Hague, the most senior UK government minister still in the country, is holding a special meeting about the turmoil with senior officials from the finance ministry, Downing Street and the Foreign Office.
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But government officials said Prime Minister David Cameron would not be cutting short his holiday.
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Stocks update: Quite simply, everyone is lower. US stocks fell 0.7%, the FTSE 100 index declined 2.4% and the Dax dropped 2.6%. Spain also fell 0.2%.
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Spain has criticised the European Central Bank's head after Jean-Claude Trichet's press conference on Thursday, where he said the ECB was buying Irish and Portuguese debt but did not mention hard-hit Italian and Spanish debt. "I have to admit that was not the best news conference I have followed by Mr Trichet," finance minister Elena Salgado said.
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Stocks update: In the US, the Dow fell more than 1% and the tech-heavy Nasdaq dropped 2% in late morning trade.
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writing in the
Freakonomics blog, says: "After Thursday's massive stock market sell-off, a lot of people are talking about how we may be experiencing another year like 2008. I'm going to get right to the point: that's impossible."
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Stock markets in Europe have closed. The UK's FTSE 100 index closes down 2.7%, or 146 points, to 5,247. Stocks in Paris fell 1.2% - the 10th day of decline - and in Frankfurt, they declined 2.8%.
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I maintain that
this is what started this sell-off, but economists might disagree. (Thanks to a loyal reader.)
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Think the politicians in Greece and Spain are loathed? A New York Times/CBS News poll finds disapproval of Congress at a record 82% following its handling of the impasse over the debt ceiling.
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emails: Isn't this just irresponsible speculation? Nothing has changed in the "fundamentals" of UK companies at all. Stop scaremongering and get back to your beach holidays.
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Perhaps this is the most telling statistic of all: A record 46 million Americans, or 15% of the population, have received government aid to buy food this year, according to the US Department of Agriculture.
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emails: This represents yet again a knee-jerk reaction by the market traders who are driven and wholly influenced by short-term sentiment. Because of their obsession with mathematical models, they have no realistic concept of longer-term stability or growth.
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The end of quite some week on the European markets. Frankfurt's Dax lost almost 13% of its value, while the FTSE 100 fell almost 10%. As things stand, the Dow is down about 7.7% on the week, although if the past half hour is anything to go by, things might look slightly better by the end of trading. Slightly that is.
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emails: Small investors like me will lose out as usual. We cannot buy and sell stock quickly enough to take advantage of the sudden ups and downs in the market - unlike traders who can buy and sell at the touch of a button!
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emails: Thank God our prime minister is here to give us reassurances about these problems, oh what's that? He's on holiday? What about his deputy? The chancellor? Good luck everybody!
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For those wondering why we in the UK should be worried about what's going on in the eurozone and the US, Vicky Pryce at FTI Consulting has these less than comforting words: "We should be terribly concerned when our two main export markets are in such difficulty."
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Nick Firoozye at investment bank Nomura is in little doubt about how the markets have worked themselves up into such a frenzy. Investors expected the European Central Bank to start buying up Italian and Spanish government bonds straight after the eurozone leaders' summit on 21 July, he says. "Essentially, there has been no action [since]."
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Thanks for following our coverage of this turbulent day on the markets - and for tolerating the Smurfs references. Handing over to David Gritten, but don't go away - our live page continues.
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Italian Prime Minister Silvio Berlusconi is expected to address a news conference shortly alongside his Economy Minister, Giulio Tremonti. The subject is not known, but the European Central Bank has called on them to accelerate social welfare and fiscal reforms in exchange for buying Italian bonds.
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US stocks have turned positive, with the Dow Jones climbing 105.28, or 0.92%, to 11,488.96. The S&P's 500 Index gained 6.71 points, or 0.56%, to 1,206.78. However, the Nasdaq dropped 3.30 points, or 0.13%, to 2,553.09.
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writes: My business sees the direct impact of scares such as this: A freeze in job creation and capital projects with business clients, combined with further reduction in consumer spending 'just in case'. The stock market will recover as it always does, but then we have a knock-on effect in business confidence which drags for months. It is my belief that the constant speculation in the media creates the self-fulfilling prophecy of the breakdown in confidence.
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More on US stock markets returning to positive territory:
Bloomberg believes it is the result of speculation that the European Central Bank is preparing to buy Italian and Spanish bonds to halt the eurozone's debt crisis.
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Thirty-year US treasury bonds are down three points in early afternoon trading, yielding 3.82%.
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French president Nicolas Sarkozy and Spanish Prime Minister Jose Luis Rodriguez Zapatero both believe that more co-ordination from governments is needed to react to fears over the global economy, Spain's government has said according to Reuters. The two leaders agreed in a telephone conversation on Friday that the Eurogroup needed to apply the accords reached at the summit on 21 June as soon as possible.
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Mr Zapatero has also discussed the crisis with his Italian counterpart, Silvio Berlusconi, Italian officials say.
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Italian PM Silvio Berlusconi announces that his government will speed up its reforms to achieve a balanced budget by 2013, AFP reports.
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He also says that Italy and France have called an emergency meeting of G7 finance ministers to discuss the debt crisis. It will take place "within days".
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The German and UK governments were consulted about the G7 meeting, Berlin says.
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More on the package of social welfare and fiscal reforms promised by the Italian government: Mr Berlusconi tells reporters: "We believe it is opportune to accelerate the measures... to reach a balanced budget early in 2013 instead of 2014."
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The Italian Finance Minister, Giulio Tremonti, meanwhile pledges to work towards amending the constitution to require balanced budget, according to the Associated Press.
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A spokesman for UK Prime Minister David Cameron says he has spoken by telephone to German Chancellor Angela Merkel about the current instability in European and US stock markets. "They agreed to monitor the situation closely and keep in close contact about the situation. The prime minister also this evening spoke by telephone to the Chancellor of the Exchequer [George Osborne] about the current economic situation."
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The US Department of Housing and Urban Development has said more needs to be done to help the housing market recover, after announcing that the government's foreclosure prevention programme helped 31,620 homeowners win lower mortgage payments in June.
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writing on his New York Times
blog says: The economy isn't recovering, and Washington has been worrying about the wrong things. It's not just that the threat of a double-dip recession has become very real. It's now impossible to deny the obvious, which is that we are not now and have never been on the road to recovery.
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Meanwhile, perhaps spare a thought for the world's richest man, Carlos Slim, who is estimated to have lost about $8bn this week. The Mexican's stock portfolio has dropped about 11% since 29 July, before Friday, and is currently valued at about $63bn,
according to data compiled by Bloomberg.
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Back to the announcement by Italy's prime minister that there will be a meeting of G7 finance minister within days. Mr Berlusconi told reporters that it could pave the way for a full-blown summit of G8 leaders "if the finance ministers manage to agree on a common plan of action". "The situation is very difficult and requires co-ordinated action. We have to recognise that the world has entered a global financial crisis that concerns all countries."
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German Chancellor Angela Merkel agrees that decisions made at last month's EU summit "must be quickly implemented", a spokesman says. Mrs Merkel would speak with US President Barack Obama later on Friday, he adds.
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More on Silvio Berlusconi's announcement that Italy's government will bring forward austerity measures to achieve a balanced budget as soon as possible. "We consider it appropriate to introduce an acceleration of the measures which we introduced recently in the fiscal planning law to give us the possibility of reaching our objective of balancing the budget early, by 2013 instead of 2014," he said. "There is a very particular attention on us on the part of international speculation and we have to put a stop to it."
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Last month, the Italian parliament adopted a four-year 70bn-euro ($99bn) austerity package aimed at cutting the deficit from 4.6% to 0.2% by 2014. The measures included deep cuts to regional subsidies, family tax benefits and top-tier pensions. It was criticised by many analysts for delaying the most painful cuts until 2013, when the next general election is scheduled.
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writes: The huge uncertainty in global markets is likely to persist until the ECB and other EU institutions come up with a credible plan for either rescuing the Euro or a time-limited strategy for reverting to individual state currencies.
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Just to recap what has happened so far: Markets around the world have witnessed a hectic day of trading - triggered by near panic at the possibility of the US slipping back into recession and of the debt crisis spreading further across Europe. At the end of a turbulent week, the London stock market plummeted 3% within minutes of opening, then rallied briefly before falling back to close down 2.7%. In New York, Wall Street opened higher, then fell sharply before rising again - it is now up nearly 1% on the day, buoyed by better-than-expected US job figures and optimism that the European Central Bank will buy Italian and Spanish bonds.
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writing on thedailybeast.com
blog, says: There is no cliff off of which the global economy is about to plunge, despite the blathering of pessimistic talking heads. We live in a much less levered world, and one in which there is a level of confidence in the world beyond the reach of Wall Street and the capitals of Europe.
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The Dow is up 91 points after being down as many as 245 points earlier on Friday. The industrial average was up 171 points today after a solid jobs report in the morning.
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The Dow and S&P 500 dropped into negative territory late on Friday. The Dow was up 17.79 points, or 0.16%, at 11,401.47. The Standard & Poor's 500 Index was down 6.67 points, or 0.56%, at 1,193.40. Investor skittishness is reportedly being seen.
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Standing beside Italian Prime Minister Silvio Berluscon, Italy's Finance Minister, Giulio Tremonti, pledged on Friday to speed up reform of Italy's social welfare system, including national health care and retirement payments.
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emails: With the oil prices falling can we expect a sharp fall in the price at the pumps? I very much doubt it, as it always seems that retailers are quick to increase the price when oil prices increase but rather slow to lower them when the situation switches!
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With 15 minutes left of trading, the Dow Jones is up 43.44 points, or .42%, at 11,427.60.
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President Barack Obama said earlier on Friday that though more measures were needed to boost job growth in the US, the economic situation in America would improve. He added that the US economy had faced a "tumultuous year".
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emails: The price of oil needs to come down anyway so why the panic? The price of oil has been pushing up inflation, therefore it's a good thing that it is coming down in the real world anyway, it has reached a ridiculous price. Hopefully it will come down more and settle at a sensible level, then the cost of everything else can drop and get inflation manageable again, which will help all economies.
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The closing bell has rung on Wall Street with the Dow Jones up 61 points, or .54%, at 11,444.68. US traders are said to be breathing a sigh of relief that the industrial average ended in the green.
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Meanwhile, the S&P 500 dipped .06% to 1,199.34, while the Nasdaq Composite fell .94% to 2.532.41.
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Marc Pado, chief US market strategist for Cantor Fitzgerald, tells the Associated Press that though the economy generated 117,000 jobs in July, the figures may not be good enough "to get us out of all this other stuff".
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emails: There is little doubt that global shares are suffering considerable loss and the whole world economy is experiencing a harsh period, which leads people to worry about governments and their lives all over the world. In this case, confidence is the most important factor we need to have. As a Chinese international student, I saw the whole process throughout this global crisis and I believe it is time for the global economy recovery with the all countries making an effort.
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Thanks for being with us on another tumultuous day on the global markets. That concludes our live coverage. Please visit the BBC News website's business index for further updates.
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We have just had two pieces of breaking news, which warrant reopening this live page: The US government is expecting bond rating agency Standard & Poor's to downgrade US debt from its current AAA value, an official has told ABC's White House Correspondent, Jake Tapper; and the European Central Bank has agreed to start buying Italian bonds on Monday, according to the AFP news agency.
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ABC says Standard & Poor's official reasons for downgrade US debt will be the political confusion surrounding the process of raising the debt ceiling, and a lack of confidence that the political system will be able to agree to more deficit reduction.
A source told the US network that Republicans saying they refuse to accept any tax increases as part of a larger deal would also be part of the reason cited.
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I have just talked to a spokesman for Standard & Poor's in New York, who declined to comment on the ABC News report.
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Earlier, US President Barack Obama has spoken separately to French President Nicolas Sarkozy and German Chancellor Angela Merkel about the latest developments. "Noting the significant steps taken at the 21 July summit of leaders of the euro area and the importance of their implementation, the president welcomed the continued leadership of President Sarkozy and Chancellor Merkel in addressing the challenges facing Europe's economy," a White House statement says.
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The Italian Minister of Federal Reforms Umberto Bossi has meanwhile revealed the European Central Bank has agreed to start buying up Italian bonds from Monday in return for a promise from the government to balance its budget by early 2013, rather than 2014. "Everyone is afraid our bonds will turn into scrap paper, but by returning to budget balance one year early, the ECB has guaranteed that from Monday it will buy our bonds," the Northern League leader was quoted by AFP as saying.
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Earlier, Italian Prime Minister Silvio Berlusconi said he had conferred with world leaders, and that an emergency meeting of G7 finance ministers would be convened within days. However, a UK Treasury source told the BBC that the idea for an emergency meeting was just an Italian proposal. The French currently hold the presidency and we would have to wait for the French to confirm if any meeting would actually be called, the source said.
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More from Umberto Bossi: Mr Berlusconi's main coalition partner said the ECB's purchase of its bonds was "a solution, a guarantee". "We absolutely need bonds because if we can't sell them we won't be able to pay for pensions or healthcare, so this is obligatory for us," he added.
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The unnamed government official cited by ABC was uncertain whether the rating would drop from AAA to AA+ or to AA.
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adds the following to his blog: "Another government official confirms the Obama administration is preparing for the downgrade, but is not 100% positive it's going to happen, and if it does happen officials are not sure when it will happen."
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On 14 July, Standard & Poor's warned of the 50-50 possibility of a downgrade within three months, even if Congress agreed legislation to raise the US debt ceiling, which happened on Tuesday.
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CNBC is also now reporting that US government officials are bracing for the rating agency Standard & Poor's to downgrade the country's credit "as early as this evening or take other possible action, according to someone familiar with the matter".
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On Tuesday, both Fitch and Moody's reaffirmed the AAA rating of the US, but with caveats. Fitch warned that the rating would "remain under pressure for some time". Moody's added a "negative" outlook to its rating.
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It is now once again time to close down the live page for the night. Earlier, ABC News reported that the White House expected the bond rating agency, Standard & Poor's, to downgrade US debt from its current AAA status. ABC said it had been told by a government official that the administration was preparing for the event, but was not sure whether the rating would drop to AA+ or AA. Standard and Poor's has declined to comment on the report. Please visit the BBC News website's front page for further updates.
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