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Fears about financial crises in the wobbling economies of southern Europe and an unexpected increase in U.S. jobless claims sent global stock markets reeling Thursday, posing new challenges for the European Union and the U.S. economic recovery.
Despite several pieces of upbeat economic data at home, the Dow Jones industrial average plunged 2.6 percent, finishing just two points above the 10,000 threshold it first crossed in 1999. Broader U.S. and foreign market indices fell about 3 percent, and oil prices fell 5 percent. The euro fell to its lowest level against the dollar since May.
What began in recent days as anxiety about the solvency of Greece and the prospect of labor unrest there spread to worry about Portugal's budget and Spain's housing bubble, then to concerns about how Europe's richer nations might come to the rescue of weaker sisters sharing the common euro currency.
Despite several pieces of upbeat economic data at home, the Dow Jones industrial average plunged 2.6 percent, finishing just two points above the 10,000 threshold it first crossed in 1999. Broader U.S. and foreign market indices fell about 3 percent, and oil prices fell 5 percent. The euro fell to its lowest level against the dollar since May.
What began in recent days as anxiety about the solvency of Greece and the prospect of labor unrest there spread to worry about Portugal's budget and Spain's housing bubble, then to concerns about how Europe's richer nations might come to the rescue of weaker sisters sharing the common euro currency.
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One spark for the day's turmoil came from Greece, where the recently elected government of Prime Minister George Papandreou is struggling to reduce its huge budget deficit, which hit 12.7 percent of gross domestic product last year. Despite a televised Tuesday-night appeal for unity by Papandreou, Greece's biggest union approved a mass strike Thursday to protest spending cuts, and tax collectors began a 48-hour walkout, raising doubts about the government's ability to fulfill its plans.
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European Central Bank President Jean-Claude Trichet said Thursday that the euro should not be punished for Greece's problems. He asserted that the 16 euro zone countries would run a combined deficit smaller than those of the United States and Japan. But, given the record U.S. budget deficit projected by the Obama administration, that provided small solace to traders.
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