Global stock markets wobble again

WORLD equity markets have tumbled again as concerns mounted about the health of the Japanese financial system. US employment data revived fears of an interest rates rise and emerging market currencies suffered speculative attacks.

US unemployment fell to a 24year low of 4.7 per cent as 285,000 workers were added to non-farm payrolls, a much larger figure than expected. To add to the inflationary implications, average weekly earnings rose by an annual 4.2 per cent - the highest figure since 1989.

"So much for the argument that there is no wage pressure visible in the statistics," said Mr Christopher Low, senior economist at HSBC Markets in New York.

The news added to the possibility that the US Federal Reserve might want to raise interest rates at next Wednesday's meeting. But the turmoil in Asian and world stock markets complicates that decision.

US President Bill Clinton seized on the data to press his case for "fast track" authority to negotiate new trade deals. "A key reason more people are working, and that wages are rising, and that unemployment is down to the lowest level in more than two decades, is that we have opened new markets and won new customers for American goods and services," he said.

Following the figures, the Dow Jones Industrial Average fell 150 points in the first few minutes and, despite a modest recovery, was still 122.55 points down at 7,560.69 at 1 p.m. New York time. It closed last night down 101.92 on 7581.32.

The fall on Wall Street prompted the dollar to dip to a five-month low and the yen to hit a six-month nadir against the deutschmark, as investors sold US and Japanese assets and looked to the German and Swiss currencies as safe havens. The trading day started badly, with the Nikkei 225 average dropping 4.2 per cent to 15,836, its lowest level for more than two years.

This increased the pressure on the financial sector, which has substantial shareholdings in the corporate sector. Smith Barney, the US broker, estimates six of Japan's banks may suffer losses on their equity portfolios below the 16,000 level.

There were sharp falls elsewhere in Asia. Further currency weakness prompted the Korean stock market to fall 6.9 per cent, while Malaysia and Hong Kong each dropped by 3 per cent.

The malaise spread to Europe where the CAC-40 index in Paris dropped by nearly 3 per cent and the DAX in Frankfurt lost 2.6 per cent in electronic trading. In London, the FTSE 100 index fell 99.5 points to 4,764.3, after being 164.2 points lower at one point.

In Dublin share prices also suffered, with the ISEQ overall index down 43.84 points to 3773.47, with the leading financial and industrial stocks bearing the brunt of the decline.

The falls in global share prices emphasised that markets have not recovered from the turmoil of the last few weeks, which have seen the biggest one-day points fall on Wall Street and substantial falls in Asian bourses, with Hong Kong down nearly 40 per cent from its peak.