Euro debt worries hit global shares

Shares tumble over weak US job figures and fears debt crisis will spread to Hungary.

Weak jobs data released in the US added to investor fears over the global economy [Reuters]

According to the US government’s May jobs report, its economy created 432,000 jobs last month – far fewer than the expected 513,000 – with most new posts being temporary hiring by the government for this year’s US census.

Euro fears

Investor confidence in the euro was hit after Hungary said it could suffer a Greece-style debt crisis.

“All the problems with sovereign debt are resurfacing,” Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, told the Reuters news agency.

“More and more countries are joining the club. There’s too much debt, and no credible way of getting rid of it.

“Sometimes it seems there’s a solution, and markets rally, but then you realise there’s no solution, and they go back down”.

Despite a massive rescue plan and pledges to cut deficits, confidence in the euro and European countries’ ability to handle heavy debt loads remains fragile.

European nations pushed for an immediate start on budget cuts at a weekend Group of 20 meeting of finance ministers.

German cuts

In Germany, the coalition of Angela Merkel, the chancellor, agreed a package of budget cuts and taxes on Monday aimed at cutting the country’s budget deficit by $96bn by 2014.

The measures, touted as Germany’s biggest austerity drive since World War II, should save $13.25 next year and lower a deficit set to exceed 5 per cent of gross domestic product this year.

Planned savings will rise to $11.8bn in 2012, $17.8bn in 2013 and $22.4bn the following year, said Guido Westerwelle, head of Merkel’s coalition partners, the Free Democrats.

This is expected to reduce the deficit to below the EU limit of 3 per cent of GDP.

Source: News Agencies