World stock markets tumbled on Friday, hit by weaker than expected employment figures from the US and record high oil prices.
A US government report showed that US employers hired just 32,000 extra workers in July, well below analysts' forecasts for a rise of 243,000 jobs. The dollar also slumped against the euro and yen after the data. The euro shot up to $1.2261 in late afternoon European trading from $1.2056 late on Thursday in New York.
The disappointing jobs data fuelled concerns that the US recovery was weakening, with one analyst describing the figure as 'shockingly low'.
On Wall Street, the Dow Jones average slumped more than 1%, while the Nasdaq was down 1.5%. European stock markets fared worse, with London's FTSE losing 1.7% to close at 4,338. Paris and Frankfurt dropped more than 2.5%.
The Labor Department also cut its estimate of job growth for May and June by a combined 61,000. The unemployment rate, however, fell to 5.5% from 5.6% in June as a separate government survey of households showed robust employment growth. The department cautioned that the household survey was a less reliable barometer of month-to-month changes in employment than its larger survey of businesses.
The report will also raise questions about how successfully the economy shook off a soft patch in June and may lead financial markets to reassess the pace of interest rate rises expected over the coming months from the Federal Reserve. Fed officials meet next Tuesday and are expected to add to a quarter-point interest rate increase made in June.
