Stock markets generally slid and other major assets including the dollar and oil fell Thursday after disappointing U.S. data added to worries about a possible global recession this year.
The optimism that has flowed through trading floors since the start of the year has stalled this week, largely due to weak US economic and earnings data.
The balance of sentiment is ebbing hope that China’s economy will recover strongly this year as it moves away from a zero-Covid policy.
“The overnight sell-off in the US has impacted sentiment,” said AJ Bell investment director Russ Mould.
“Weak US retail sales suggest consumer resilience may have been pushed beyond the breaking point.”
Mold added that Microsoft’s plan to cut 10,000 jobs “and some weak earnings reports also didn’t help market sentiment”.
European Central Bank chief Christine Lagarde on Thursday insisted that the eurozone economy will do “better” this year than feared.
“The economic news has become more positive in recent weeks”, Lagarde told the audience at the World Economic Forum in Davos.
Elsewhere, the New Zealand dollar and the country’s stock market suffered minor losses after Prime Minister Jacinda Ardern’s shock announcement that she would step down next month, saying she did not have “enough in the tank”.
Hopes that US interest rates will not rise as previously feared weigh on the US dollar.
Yen retreated sharply after Wednesday’s decline triggered by the Bank of Japan’s decision to leave monetary policy unchanged.
Some Federal Reserve officials have warned that the US central bank will continue to tighten its own policy until inflation is brought down from multi-decade highs.
After five consecutive increases, Norway left the benchmark interest rate on hold at 2.75 percent on Friday but hinted at a new rise in March.
Recession worries are also weighing on oil prices, although there are hopes that demand will pick up as China reopens to the world.
– Key figure around 1200 GMT –
London – FTSE 100: DOWN 1.1 percent at 7,744.88 points
Frankfurt – DAX: DOWN 1.6 percent at 14,945.83
Paris – CAC 40: DOWN 1.5 percent at 6,975.55
EURO STOXX 50: DOWN 1.6 percent at 4,107.52
Tokyo – Nikkei 225: DOWN 1.4 percent at 26,405.23 (close)
Hong Kong – Hang Seng Index: DOWN 0.1 percent at 21,650.98 (close)
Shanghai – Composite: UP 0.5 percent at 3,240.28 (close)
New York – Dow: DOWN 1.8 percent at 33,296.96 (close)
Dollar/yen: DOWN at 128.58 yen from 128.80 yen on Wednesday
Euro/dollar: UP at $1.0824 from $1.0797
Pound/dollar: UP at $1.2356 from $1.2344
Euro/pound: UP at 87.60 pence from 87.43 pence
West Texas Intermediate: DOWN 0.7 percent at $78.92 a barrel
Brent North Sea crude: DOWN 0.7 percent at $84.37 a barrel