FTSE 100 INDEX
Stock markets have fallen sharply as weak US jobs data added to fears of a new global economic downturn.
The Dow Jones opened 2% lower, while European stocks added to earlier losses as the Department of Labor said the US economy added no net jobs in August.
The jobs data follows manufacturing sector surveys released on Thursday which showed activity at factories worldwide dropped last month.
Markets had already fallen steadily since Thursday afternoon in the US.Banks hammered
By mid-afternoon on Friday, London's FTSE 100 was 2.9% down for the day and Frankfurt's Dax was 4% lower.
The London market was not helped by other data on Friday that pointed to a further slowdown in the construction sector in the UK.
The slump began in late trading in the US on Thursday, where the Dow Jones ended the day 1% lower, before continuing in Asia on Friday morning, where Tokyo's Nikkei fell 1.2%, and Hong Kong's Hang Seng 1.8%.
Banks were the worst performers on Friday.
In the UK, Lloyds fell 5.5% and Barclays 6.7%, while on the continent Commerzbank was down 5.8%, Deutsche Bank 5.7% and Societe Generale 5.8%.
In the US, where it has emerged that the banks will be sued by a US government home loans agency, shares in Bank of America were hammered, dropping 8% at the open, while Citibank fell 5.2%.Seeking safety
The latest falls follow a highly volatile August, with markets globally rocked by a slew of weak economic data from the US and Europe.Continue reading the main story
There were also fears over the impact of government austerity programmes, and concern at the implications of the downgrade of some governments' credit ratings, including that of the US.
Haven investments rallied as investors sought safety from the downturn.
Gold rose 3% for the day to just below $1,880 a troy ounce, close to the all-time high of $1,913.50 set last month.
The euro fell 3% against the Swiss franc, briefly touching 1.10 francs after the US jobs data release.
The Swiss authorities have repeatedly intervened to weaken their currency after the euro dropped below the 1.05 francs level last month.
US government debt also rallied, with the yield - the implied cost of borrowing - of the 10-year Treasury bond falling instantly from 2.13% to 2.03%, in anticipation of a possible further round of debt purchases by the Federal Reserve.
The 10-year yield briefly dropped below 2% early in August, hitting its lowest level since World War II.
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