London: World stocks fell and the US dollar broadly held firm on Friday as doubts grew about the pace of economic recovery and the week’s major data on US jobs loomed large.
European shares tumbled at the open, following steep losses in Asia and on Wall Street overnight as investors moved to the relative safely of bonds.
Markets were on edge ahead of US non-farm payrolls, due at 1230 GMT, fearing more disappointing news after a report on Thursday showed US manufacturing growth was slower than expected in September.
The MSCI world equity index fell 0.98% to 278.78, the second straight day of decline after rising 17% in the third quarter which ended Wednesday.
European shares were down 1.0% in early trade after tumbling 1.6% on Thursday to hit a three-week closing low.
The index, which posted its best quarterly performance in nearly 10 years in the last quarter, was on track for a third day of losses.
“We have been waiting for a correction for quite a while,” said Heino Ruland, strategist at Ruland Research, in Frankfurt.
“The third quarter performed pretty strongly. With the beginning of the fourth quarter, we have to realise that the economy is by far not in the shape which the performance of the equity market would suggest.”
Shares in Tokyo’s Nikkei average hit a two-month closing low on Friday, falling 2.5% or 246.77 points to 9,731.87. The average slid 5.2% on the week for its biggest weekly drop in about three months.
Toyota Motor and Honda Motor shed more than 3% and concerns about the strength of the yen added pressure as Toyota president Akio Toyoda said it would be difficult for the auto giant to return to profit while the dollar was weak.
Trade across Asia was quieter than usual with markets in China, India and South Korea closed for public holidays.
US treasuries rose, with the yield on benchmark 10-year notes falling to 3.16%, their lowest in more than four months and down 2 basis points from late US trade.
Economists polled by Reuters estimate the US economy shed 180,000 jobs in September, fewer than the 216,000 jobs lost in August, while unemployment rose to 9.8% in September from 9.7% in August.
But Goldman Sachs called for even bigger job losses on Thursday, saying it now sees non-farm payrolls falling 250,000 from its previous estimate of 200,000 after recent weak data.
A figure out of line with forecasts either way is likely to have dramatic market impact.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, held steady above 77.
“For today, it’s all about being square, not being too aggressive on positioning,” said Roberto Mialich, FX strategist at Unicredit in Milan, adding that the dollar will “perversely” benefit from falling US stocks and weak jobs data.
US crude oil futures fell more than one percent below $70 a barrel as worries over the West’s talks with Iran about the Opec member’s nuclear plans eased.
Gold edged up to hover just under $1,000 an ounce.