Worries about US economy drive stocks down

Posted April 10, 2012, at 7:07 p.m.

PARIS — Concerns that the world’s powerhouse economies of China and the U.S. are struggling and that Europe’s debt crisis isn’t over drove most global stocks down on Tuesday.

European indexes were particularly hit as traders got their first opportunity to react to fairly dismal American jobs data after the long Easter weekend.

On Friday, the U.S. announced that the economy added 120,000 jobs in March, half the previous month’s gain and the fewest in five months. That sent shares tumbling in the U.S., with European indexes were catching up Tuesday.

Hopes that the U.S. economy is recovering and thereby lift other economies with it have powered substantial gains in the stock market this year.

But now that recovery looks increasingly uncertain, and China has also revised its growth projections.

Stocks were dropping on the “realization that a few recent pieces of positive economic data was not enough to justify the recent spell of confidence with the current pace of global growth,” said Shavaz Dhalla, a trader with Spreadex. “However, the European debt situation should remind investors that the U.S. is not alone in this.”

Last week, disappointing Spanish bond auctions raised the possibility that the country might have to seek a bailout. The yields, or interest rates, on its bonds and those of other vulnerable European countries began rising and continued higher on Tuesday, an indication of investor wariness.

Spain’s 10-year bond yield rose to 5.93 percent, pushing the difference — or spread — with the benchmark German yield to the highest since December, when the new government came to power.

“Also keeping investors on edge this morning is the eurozone, where Spanish and Italian bond yields are creeping up, even as Madrid and Rome attempt to point the finger at each other as the source of current tensions,” said Chris Beauchamp, a markets analyst for IG Index.

Rising yields have been the hallmark of Europe’s debt crisis, eventually pushing three countries — Greece, Ireland and Portugal — to seek rescue loans when they could no longer afford to borrow money from markets to fund their economies.

Amid all the bleak signs, European shares dived Tuesday.

France’s CAC-40 plummeted 3.1 percent to 3,217, while the DAX in Germany fell 2.5 percent to 6,606. The FTSE index of leading British shares lost 2.2 percent to 5,595. The euro was down 0.25 percent to $1.3080.

The Dow fell 213.66 points, its third triple-digit loss in four days. It closed at 12,715.93, its lowest since Feb. 2.

The dollar and U.S. Treasury prices rose as investors shifted money into lower-risk investments. The yield on the benchmark 10-year Treasury note fell for the fifth straight day and dropped below 2 percent for the first time in a month.

Concerns about the health of an economic rebound have also been heightened by high energy prices, which many analysts worry are making any recovery harder. Oil prices have retreated off their recent highs, though, and benchmark oil for May delivery shed $1.60 cents to $100.81.

Earlier in Asia, most markets closed down.

Tokyo’s Nikkei 225 index slipped 0.1 percent to 9,538.02 and Hong Kong’s Hang Seng fell 1.1 percent to 20,362.22. South Korea’s Kospi shed 0.1 percent to 1,994.41.

China’s benchmark Shanghai Composite Index, meanwhile, rose 0.9 percent to 2,305.86.

Elsewhere in Asia, the benchmark indexes in Australia, Thailand and India were down. Those of Taiwan, New Zealand, and Singapore were up.

Alex Kennedy contributed to this report from Singapore.

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