Global markets slump on renewed recession fears

Global sharemarkets slumped with heavy losses for financials and exporters after a disappointing US jobs report and continued concerns over Europe's sovereign debt crisis heightened fears of another recession.

The Stoxx Europe 600 index slumped 4.1% to close at 223.45 and all Asian markets were down sharply. US markets are closed for the Labor Day holiday.

Europe’s beleaguered banking sector was also hit by lawsuits filed against 17 lenders by the US housing regulator, who says they sold $US196 billion of risky home loans over four years to Fannie Mae and Freddie Mac without adequately disclosing the risks.

Further evidence of the weakness of the European economy came in weak purchasing managers index data from France, Germany and the euro zone as whole.

Shares of Royal Bank of Scotland Group, one of the banks named in the US lawsuit, plunged 12%, while Deutsche Bank, another one of the banks, tumbled 8.9%.

The German DAX 30 index sank 5.3% to 5246.18, the French CAC 40 index finished 4.7% lower at 2999.54 and the UK’s FTSE 100 was down 3.6% to 5102.58.

In Asia, Hong Kong shares suffered the additional head winds from a Purchasing Managers' Index that showed the first contraction since 2009.

The Hang Seng Index ended down 3% at 19,616.40, while Australia's S&P/ASX 200 index fell 2.4% to 4141.9 and Korea's Kospi plunged 4.4% to 1785.83.

Japan's Nikkei Stock Average ended with a 1.9% loss at 8784.46, while the Shanghai Composite slid 2% to 2478.74 and India's Sensex fell 0.6% to 16,713.33.

Commodities: Oil down, gold rises
Oil futures fell as the euro slipped to multi-week lows against the US dollar and share markets tumbled.

In New York, light, sweet crude futures for delivery in October traded at $US84.99 a barrel, down $US1.46 in the Globex electronic session. October Brent crude on London's ICE Futures exchange fell $US1.23 to $US111.10 a barrel.

In London, the spot price of gold hovered around $US1900 an ounce, just shy of the record set last month.

Spot gold was up $US7.20, or 0.4%, at $US1891.40 an ounce, or just over $US20 shy of the intraday record of $US1,912.29 an ounce.

Currencies: US dollar holds up
The US dollar rose against most major rivals as European equity markets sank.

Trading activity was thin with US markets closed.

The euro traded at $US1.4122, down from $US1.4197 late on Friday. Against the yen, / the dollar bought ¥76.85, up from ¥76.72.

The UK pound traded at $US1.6122, down from $US1.6212.