Worrying signs that eurozone woes are affecting the United States and China triggered another slide on world markets.
The weakest US jobs growth in a year, and figures showing expansion in China’s manufacturing sector almost ground to a halt last month, dashed hopes that the world’s two largest economies will ride out the euro storm.
In the UK dire manufacturing figures showing the second sharpest fall in activity in the 20 years of the Markit/CIPS survey. However the collapse to a three-year low appeared to reflect the increasing weakness of the UK domestic market, with order books shrinking faster than export orders.
There was a similar weak performance from European manufacturers, while unemployment across the 17 countries that use the euro remained at 11 per cent in April.
The pound slipped lower on currency markets and the wave of grim data knocked more than 1 per cent off London’s leading shares index, which had its worst month in three years in May.
The Dow Jones Industrial Average was off 1.5 per cent, while declines were even heavier on markets in Germany and France, with the Dax down 3 per cent and the CAC 40 off 2 per cent.
Jason Conibear, a director at forex specialists Cambridge Mercantile, said: ““The global economy is in a seriously bad way and we’re running out of options to turn things around.”
Market report: Section 2; Page 15.