Shares fall as economic worries persist
by Kay Murchie
US and European shares have plummeted today due to fears of the US economy and a slowing Eurozone.
Official figures revealed that unemployment increased to a five-year high as jobs are being slashed due to the global economic downturn.
The US Labour Department said the number of Americans claiming unemployment benefits increased by 15,000 to 444,000 in the week ended 30 August.
The shock rise in unemployment panicked investors, coming after three successive weeks of declining benefit claims.
Today in London, the FTSE 100 of leading shares closed 137.6 points lower at 5,362.1 while Germany’s Dax-30 index fell 2.9% to 6,279.57 points. France’s Cac-40 index lost 3.2%.
In New York, the Dow Jones industrial average plunged by 324.8 points to 11,208 in afternoon trading today.
According to analysts, the weekly unemployment figures can be volatile. The four-week moving average of initial claims, a less volatile measure, slipped from 441,250 to 438,000 last week, indicating a greater level of stability.
Tomorrow, the closely monitored US monthly employment report is published and analysts are expecting the US economy to have lost an additional 70,000 jobs in August, taking the annual total to more than 500,000.
In related news, concerns about inflation continue in the US and Europe, and Central Banks have refrained from lowering interest rates to help forestall a slowdown.
Today, the Bank of England’s Monetary Policy Committee opted to retain interest rates at 5%.
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