US and UK shares keep falling
Shares in New York moved lower on Thursday because of fears about the strength of any economic recovery.

Investors were disappointed by sales figures from the retail giant Wal-Mart which suggested that the slow recovery would continue to hit US company profits.

And the service sector in general was weaker than expected, according to the latest figures from the Institute for Supply Management (ISM) Index.

The survey fell to 50.9 in August, from 53.1 in July. This means that the rate of growth in industries other than manufacturing has slowed.

Rates on hold

In New York, the Dow Jones index was down 141 points to 8,284 points.

Earlier, stocks in London and the other European markets had fallen sharply because of worries about the economy and the situation in the Middle East.

But the FTSE 100 index of leading shares recovered most of its losses to end down 16 points at 4,011.

News that the Bank of England had kept interest rates on hold at 4% for the 10th month, was widely expected and did little to boost UK shares.

Gloomy outlook

Martin Dobson, a trader at NatWest Stockbrokers, said talk of war had unsettled investors even further.

"There's a mood of complete uncertainty about the potential damage to the economy," he said.

Insurance groups led the fallers after Swiss group Zurich Financial reported heavy losses and announced plans to cut 4,500 jobs.

The global economic recovery is in danger of losing momentum


A raft of results provided little cheer, with drinks giant Diageo, the maker of Smirnoff vodka and Guinness, warning that the year ahead would be tough.

The news compounded the unhealthy picture created by the CBI and Halifax on Wednesday.

The CBI reported the slowest High Street spending in two years and said: "The global economic recovery is in danger of losing momentum."

Europe-wide slump

Elsewhere in Europe, the picture was little better.

German manufacturing orders for July were well below analysts' forecasts and results from chipmaker Infineon included a cautious outlook.

The Dax 30 was down 71 points at 3,355 points.

In late August investors' perceptions changed from the glass being half full to the glass being half empty

Andy Hartwill, SG Hambros

But France Telecom shares lost almost 9% following a report in the newspaper La Tribune that it would soon report a record loss.

The Cac 40 index in Paris finished down 29 points at 3,139.

No respite

Economists say the relentless flow of bad news is hitting consumer sentiment across Europe.

Andy Hartwill, global strategist at SG Hambros, said: "In late August, investors' perceptions changed from the glass being half full to the glass being half empty".

The mood was not helped by a European Commission, warning it might reduce estimates for economic growth during 2002, amid fears the tension with Iraq could boost oil prices.

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