The Lord giveth and the Lord taketh away

Investment strategist

The broader Dow Jones industrial average ended down about 127 points, or 1.3%, at 9,791.

A further flood of profit warnings from technology and internet companies dampened investor confidence.

Recession worries were also deepened after California's largest investor-owned electric utility Pacific Gas & Electricity filed for bankruptcy protection.

"The Lord giveth and the Lord taketh away," commented Ned Riley, chief investment strategist at State Street Global Advisors, which manages about $740bn.

Slowdown widening

The US Labor Department's March jobs report showed a decline of 86,000 in employment, the biggest fall in a decade, taking many analysts by surprise.

"People are bracing themselves for a slide now," said John Forelli, senior vice president at Independence Investment Associates.

"Every piece of data that comes is pushing off the possibility of a second-half economic recovery.

"The further it gets pushed out, the less likely people are going to step up to the plate and buy."

Analysts said the falling number of jobs available in the service sector was a worrying sign that the US slowdown was spreading throughout the economy.

European markets fall

The US news drove down European markets, which had been enjoying a modest recovery.

The FTSE 100 index climbed 50 points within minutes of opening, but the gains had been erased within two hours of the start of trading. And the index closed down by 20 points at 5,601.5.

Leading French and German shares also lost initial gains to close lower.

World stock markets, 2200GMT GMT

London 5,601.5 down 20 points Paris 5,139.71 down 18.85 Frankfurt 5,698, down 74 Nasdaq 1,720, down 64 Dow 9,791, down 127

Analysts said investors remained in an extremely nervous mood.

The enthusiasm of UK tech investors was tempered by a profits warning issued late on Thursday by software group Autonomy.

Autonomy said a slowdown in information technology (IT) spending by companies had now spread from the US to Europe.

It also said the spending slowdown was across all industries, adding this was "a sign of a very, sharp, sudden recession globally".

Tokyo flat

Earlier on Friday, Tokyo shares had ended the day marginally higher, after US-inspired gains in technology stocks were wiped out by a weak banking sector.

The benchmark Nikkei 225 index closed at 13,383.76, up 0.02% or 2.38 points.

The mixed day of trading in Tokyo following a day of strong gains on US stock markets, in which the tech-heavy Nasdaq advanced 9% and the Dow Jones industrial average put on more than 4%.

Japanese tech stocks were mostly higher on Friday, helped by the announcement by the US's Dell, the world's number two personal computer maker, that it would meet its latest sales expectations.