Conflicting signals on the state of the US economy and an American attack on Iraq knocked confidence on Wall Street and sent global bourses lower last week, reversing most of the gains made in the previous week. The FTSE World index shed 2.4 per cent.
In the US, Tuesday saw the release of encouraging durable goods orders for July which showed their biggest increase in nine months. The news, temporarily at least, put fears of a double-dip recession on the backburner. However, consumer data out on the same day confirmed that consumer confidence had fallen to a nine-month low in August. This, coupled with Thursday's poor job figures showing claims for benefit rising for a third consecutive week, highlighted increasing concern for US consumer spending, which accounts for 60 per cent of the economy.
The telecom and tech stocks led the market lower after troubled Canadian equipment maker Nortel Networks lowered its third-quarter revenue forecasts and announced 7,000 job cuts. The Nasdaq 100 was the hardest-hit index, falling by 6.7 per cent, the Dow and the broader S&P Composite both lost about 2.5 per cent.
The shine was taken off a strong showing by European equities early in the week by data from the US and poor performance by the tech, telecom and the insurance stocks. The FTSE Eurotop 300 fell by 3.5 per cent. European insurers had another difficult week with the world's two leading reinsurers announcing worse than expected first-half figures. Swiss Re, the second-biggest, fell by 13.7 per cent on Thursday after net profits came in almost SFr1bn less than forecast. Global number one Munich Re abandoned its full-year profit forecast after posting a dismal second quarter.
In Japan, investors failed to be impressed by data showing second quarter GDP growing by 0.5 per cent, instead focusing on disappointing industrial production figures for July. The Nikkei 225 shed 2.5 per cent.
In Hong Kong, five consecutive down sessions saw the Hang Seng index fall by 2 per cent with property shares being marked sharply lower.