World shares slid and German borrowing costs hit record lows on Friday as a deepening Spanish banking crisis, uncertainty about Greece’s future in the euro zone and lacklustre U.S. data bolstered safe-haven assets.
World stocks, as measured by the MSCI index, dropped 0.7 percent and are now below where they began the year, having relinquished all the first-quarter gains fuelled by the European Central Bank’s injection of more than a trillion euros of three-year money.
That rally is now a distant memory as an ugly week for stock markets looked likely to end even uglier.
Across the board, riskier assets from commodities such as oil and currencies like the euro and the Australian dollar were all heading for big weekly losses.
While U.S. stock futures pointed to a modestly higher open on Wall Street, following a sharp drop on Thursday, the FTSEurofirst 300 of leading European shares slid 0.6 percent to 975.71 by 1130 GMT, falling for a fifth day running and taking its weekly loss so far to nearly 5 percent.
Facebook will make its Wall Street debut after the world’s No.1 online social network raised about $16 billion in one of the biggest initial public offerings in U.S. history.
Benchmark 10-year German bond yields hit a record low of 1.396 percent and two-year yields also fell to their lowest-ever level at just 0.028 percent.
Investors were spooked by a ratings downgrade of 16 Spanish banks by Moody’s Investors Service – although the move had been expected – and an unexpected contraction in U.S. regional factory activity reported on Thursday.
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