Newspaper article International New York Times

Global Malaise Sends Chill across Markets

Newspaper article International New York Times

Global Malaise Sends Chill across Markets

Article excerpt

Renewed fears of an economic slowdown in Europe and Asia are taking a toll on world stocks, particularly in Europe, where markets slid over the last week.

Renewed fears of an economic slowdown in Europe and Asia have injected a note of fear into what had been some complacent markets, leading to a sharp sell-off in stocks in the past few days.

European equities slid again Friday, ending a bumpy week in which the Euro Stoxx 50 index lost more than 4 percent and the FTSE declined almost 3 percent. Shares in the United States have had an equally dismal run, with the Standard & Poor's 500-stock index down 2 percent for the week by noon Friday in New York.

Investors around the world have been selling riskier assets, like stocks and oil, and seeking out safe havens, like Treasury bonds and gold, leading to levels of volatility that have not been seen since early this year. The S.&P. went two months this summer without a daily move of 1 percent or more; there have been six over the last two weeks.

The gloom has been building in recent days as economic data pointed to sluggish growth, or even contraction, in big economies like Germany and Japan. World leaders gathered in Washington on Thursday and Friday for the annual meetings of the International Monetary Fund and the World Bank suggested that all of the efforts to stimulate growth in the European Union and Asia over the last few years have yielded disappointing results.

"In the face of what we have called the risk of a new mediocre, where growth is low, and uneven, we certainly believe that there has to be a new momentum," Christine Lagarde, the managing director of the International Monetary Fund, said at a news conference on Thursday.

The weakness prompted the I.M.F. this past week to trim its projections for economic growth in the eurozone to 1.3 percent in 2014, 0.3 percentage point less than its last estimate.

The United States has been one of the few bright spots in the global economy. A new report on unemployment claims released Thursday bolstered recent hope that the job market is continuing to improve, albeit unevenly.

But troubles in the rest of the world could lead to a rocky road ahead for American exporters, and particularly for the energy industry, which has been one of the biggest engines of growth for the United States economy. …

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