Fears of a severe recession gripped financial markets on Thursday as dire US unemployment figures helped drive long-term interest rates to record lows. Economic news across the world was almost uniformly bad as slumping Japanese exports threatened to deepen Japan’s recession and the Swiss central bank slashed interest rates by a full percentage point. In New York, the S&P 500 index closed down 6.7% at 752.44, its lowest for more than 11 years, as investors reacted to bleak US jobs data and the stalling of a bail-out plan for US carmakers. In the UK, the FTSE 100 fell 3.3% to below 4,000 for the first time since October, as Rolls-Royce announced plans to cut up to 2,000 jobs next year. China meanwhile warned that the employment outlook was becoming “grim” amid fresh factory closures in the export sector. Two-year US interest rates slid below 1% to their lowest levels amid a gathering conviction that the Fed would again cut interest rates next month. US jobs data showed 542,000 workers filing new claims for jobless benefits last week, the most since the early 1990s recession and well above economists’ forecasts of 500,000.

This entry was posted by Gwen Robinson on Friday, November 21st, 2008 at 5:49 and is filed under Capital markets. Edit this entry.