The euro dipped to a two-year low and Wall Street fell more than 1 per cent today, after US jobs growth disappointed, and manufacturing output shrank in Europe and slowed in China.
The Labor Department said employers created a paltry 69,000 jobs last month, the weakest in a year, and the unemployment rate rose to 8.2 per cent. Economists polled by Reuters had expected non-farm payrolls to increase 150,000.
The euro briefly fell to a session low of $1.2286 after the jobs data, a new
23-month low, before recovering. It last traded at $1.2348, down 0.1 per cent on the day.
The yen rose, hitting its strongest in more than a decade against the euro and a 3.5-month high versus the dollar after weaker than expected data.
But the Japanese currency later trimmed most of its losses, with traders citing market rumors of intervention by Japanese authorities to weaken the yen. Japan's Ministry of Finance declined to comment. Traders said it was just talk and there was no sign of actual intervention.
China's economy showed signs of a broadening slowdown as its official purchasing managers' index fell to 50.4 in May from April's 13-month high of 53.3, signalling a
deeper-than-forecast deterioration in demand at home and abroad.
"It's a continuation of the slowdown in the economic numbers we've been seeing domestically over the last couple of months," said Darrell Cronk, regional chief investment officer for Wells Fargo Private Bank in the Northeast, in New York.
The Dow Jones industrial average dropped 143.04 points, or 1.15 per cent, to 12,250.41. The Standard & Poor's 500 Index dropped 16.86 points, or 1.29 per cent, to 1,293.47. The Nasdaq Composite Index dropped 39.93 points, or 1.41 per cent, to 2,787.41.
In Europe, British stocks accelerated losses in afternoon trade on news that US jobs growth was the weakest in a year in May.
The FTSE 100 index was down 1.4 per cent, or 73.40 points, at 5,249.44, having earlier fallen as far as 5,229.76 - its lowest since early December - after posting its biggest monthly loss in over three years in May.
"We are ahead of a long weekend, no one in the UK wants to go through their weekend long of anything so we are looking very vulnerable," said James Ferguson, strategist at Westhouse.
"Things are looking oversold but they are not looking oversold enough to pull in the speculative buyers ... To be oversold enough we would probably need to come down closer to the 5,100 (or) maybe 5,150 mark."
The London Stock Exchange will be closed for public holidays on Monday and Tuesday.