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Last Updated: Friday, 12 May 2006, 21:01 GMT 22:01 UK
Weaker dollar hits world markets
Traders work on the floor of the New York Stock Exchange
US stocks have taken their cue from Europe and Asia
European stock markets fell sharply on Friday, as the weaker dollar and fresh inflation fears rattled investors.

London's leading FTSE 100 index dropped by more than 2%, closing below 6,000 points to its lowest level since March.

European shares saw their biggest one-day percentage fall in almost two years, with the Frankfurt Dax and Paris Cac indexes closing down more than 2%.

The depressed outlook across Europe was mirrored in the US, where the key Dow Jones index closed down more than 1%.

Inflation fears

There are a lot of macro risks which could have a strong impact on the markets - the weak dollar, added to inflation fears, could hit European exporters
Teun Draaisma, Morgan Stanley strategist

Losses in London were led by major mining stocks, including Anglo-American and Rio-Tinto, as the weakening dollar took its toll on UK-listed companies which trade in dollars.

Against the pound, the dollar was down more than 0.55% at 0.52, while against the euro it was down 0.58% at 0.77 euro.

"There are a lot of macro risks which could have a strong impact on the markets," said Morgan Stanley strategist Teun Draaisma.

"The weak dollar, added to inflation fears, could hit European exporters - in particular autos."

London's Footsie index closed down 129.90 points at 5,912.1, Germany's Dax index finished down 138.44 points at 5,916.3, while France's Cac index closed down 112.49 points at 5,150.5.

In New York, the Dow Jones Industrial Average closed down 119.74 points at 11,381.

The tide of falling stock markets in Europe followed on from earlier losses in Asia and overnight losses on Wall Street on Thursday.

Japan's Nikkei 225 index slid to its lowest close in seven weeks after the yen rose to an eight-month high against the dollar, hitting major exporters such as car giant Toyota.




MARKET DATA - 11:36 UK

FTSE 100
5429.64up
23.70 0.44%
Dax
5733.05up
19.54 0.34%
Cac 40
3784.02up
14.48 0.38%
Dow Jones
10403.79up
78.53 0.76%
Nasdaq
2273.57up
35.31 1.58%
S&P 500
1115.71up
11.22 1.02%
BBC Global 30
5707.15up
20.65 0.36%
Data delayed by at least 15 minutes

SEE ALSO:
Weak retail figures hit US shares
11 May 06 |  Business
Bank hints at future UK rate rise
10 May 06 |  Business
Factory prices threaten inflation
08 May 06 |  Business
US shares pull down BBC Global 30
05 May 06 |  Business



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