Bad news from the U.S. manufacturing and labor markets worried investors, pushing down the Dow Jones Industrial Average by as much as 200 points at one stage, trading down 177.25 – or 1.7 percent - at 10,238.29 in early afternoon trade.

The Dow recovered slightly to close at 10,271.21, down 144.33 points. The Nasdaq and S&P 500 indices were down 1.66 percent and 1.69 percent respectively.   The flurry of data turned trading screens red, with shares in transport companies singled out with the Dow Jones 20 Transportation average falling by 2.9 percent, while investors fretted about the state of the global personal computer market with Hewlett-Packard and Dell because of quarterly profits reports due after the bell in New York last night.
Asian markets followed the U.S. and European markets lower on Friday. Japan's Nikkei 225 fell 1.4.percent, Australia's S&P/ASX 200 dropped 1.1 percent and China's Shanghai Composite slid 1.3 percent.
European stocks dipped in early trade on Friday as fears of a double-dip recession remained at the forefront of investors' minds. In London, the FTSE 100 was down 0.1 percent after dropping 1.73pc on Thursday.
Germany's DAX fell 0.3 percent and the CAC-40 lost 0.2 percent after sliding 1.8 percent and 2 percent respectively.
The main cause of the prevailing gloom was the Philadelphia Federal Reserve's monthly report on Thursday on the state of the manufacturing industry in Pennsylvania, New Jersey and Delaware – part of the U.S.'s industrial heartland.
The Philly Fed said its index of current activity – in which a reading above zero is positive – showed contraction for the first time since July 2009, with a reading of –7.7, from +5.1 in July.
The data came at the same time as the number of people claiming unemployment benefit for the first time last week rose to the half-million mark for the first time since November 2009. Economists had expected the number of jobless claims to fall rather than rise as it did by 12,000. Jeremy Cook, at currency broker World First, said: this ""will further heighten fears that the U.S. economy is careering into the dreaded double-dip recession.""
Investors were also given pause for thought by the Conference Board's index of leading indicators, which showed a rise of 0.1 percent in July.
Nevertheless, Ataman Ozyildirim, economist at The Conference Board, admitted the index is ""growing at its slowest pace since mid-2009 and it has been essentially flat since March.""
Investors jitters that led to a sell-off in the Dow Jones in New York spread to Asian markets on Friday.
Bad news from the U.S. manufacturing and labor markets worried investors, pushing down the Dow Jones Industrial Average by as much as 200 points at one stage, trading down 177.25 – or 1.7pc - at 10,238.29 in early afternoon trade.
The Dow recovered slightly to close at 10,271.21, down 144.33 points. The Nasdaq and S&P 500 indices were down 1.66 percent and 1.69 percent respectively.   (Source: Daily Telegraph)