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Overseas Markets React to Signs of Renewed U.S. Recession

Getty Images(LONDON) -- Stocks across Europe were down Friday morning amid continuing fears over the widening Euro Zone debt crisis and signs of renewed recession in the U.S., after Wall Street's 513-point-plus nosedive Thursday.

The FTSE fell 3% in the first few minutes of trading but has since stabilised slightly. The UK’s main banks’ share prices have been hard hit due to Greece's financial problems.

The primary cause of Europe’s jitters appears to be the sovereign debt problem, its spread to Spain and Italy, and growing scepticism that Europe’s political leaders aren't doing enough to solve the spreading problem.

The confidence following the 31st July announcement of funds to support the latest Greek bailout has all but evaporated. None of the 17 Euro Zone parliaments have ratified the move, and people now doubt the amount pledged is enough.

There is widespread criticism in the European press Friday that German Chancellor Merkel, France's President Sarkozy, British Prime Minister Cameron et al, are still on vacation despite the deepening crisis. Sarkozy and Merkel will hold a telephone conference call Friday and there are hopes that the European Central Bank might start buying stressed Spanish and Italian bonds at some point in the future.

The U.S. jobs figures release Friday will certainly be closely watched in Europe in the last hours of trading. Applications for unemployment in the States have remained at or above the 400,000 mark for 17 straight weeks.

Copyright 2011 ABC News Radio

ABC News Radio