US and European stock markets fall on weak US jobs data

Stock markets have fallen sharply as weak US jobs data added to fears of a new global economic downturn.

Wall Street was hit hard, with the Dow Jones, S&P 500, and Nasdaq indexes down more than 2%.

Earlier, European stocks closed lower as the Department of Labor said the US economy added no net jobs in August.

The jobs data follows manufacturing sector surveys released on Thursday which showed activity at factories worldwide dropped last month.

London's FTSE 100 ended 2.3% down, and Frankfurt's Dax was 3.36% lower. In France and Spain, markets were more than 3% down, and Milan's exchange sank almost 4%.

The Dow dropped 2.2%, and the S&P and Nasdaq were 2.5% down.

The London market was not helped by other data on Friday that pointed to a further slowdown in the construction sector in the UK.

The slump began in late trading in the US on Thursday, where the Dow Jones ended the day 1% lower, before continuing in Asia on Friday morning, where Tokyo's Nikkei fell 1.2%, and Hong Kong's Hang Seng 1.8%.

Banks across Europe were among the worst performers.

In the UK, Barclays fell 8.4% and Lloyds 7.1%. In Germany, Deutsche Bank and Commerzbank were down 6% and 5.5% respectively. In France, Credit Agricole fell 7.4% and Societe Generale was off 6.6%.

In the US, where it has emerged that the banks will be sued by a US government home loans agency, shares in Bank of America were hammered, dropping 8% at the open, while Citibank fell 5.2%.