(Reuters) - A wave of risk aversion hit financial markets on Friday, pushing world stocks to their lowest in more than two years, and knocking European currencies and oil as fears about the slowing global economy intensified.
Safe-haven assets such as yen and government bonds benefited after Wall Street had its steepest decline in more than two months as weak U.S. labor market data boosted nervousness about a closely-watched monthly jobs report later in the day.
Bank stocks took a hit after the European Central Bank tightened rules on the assets banks can submit as collateral in central bank lending operations following concern that its rules have been open to misuse. 
Risk aversion also hit emerging markets -- which have already been under pressure in recent weeks on rising political and economic risk -- with benchmark emerging stocks hitting a 17-month low.
"Global deleveraging remains the dominant theme in markets as the economic and financial sector news continues to disappoint," noted Mitul Kotecha, head of FX strategy at Calyon. "The path of destruction that this deleveraging is causing was evident in the slide in U.S. equities and subsequent decline in Asian equity markets."
The FTSEurofirst 300 index fell 0.7 percent, following even steeper moves in Asian stocks.
The MSCI main world equity index dropped 0.8 percent, hitting its lowest since July 2006. The index has made six sessions of consecutive losses and already lost 5.6 percent since the start of the month.
European banking shares fell 1.5 percent. The ECB is set to increase the safety margin it takes in valuing assets, known as the haircut, to 12 percent across the board for all asset-backed securities (ABS) which banks deposit with the ECB to receive short-term funding and access payment systems.
Analysts say the changes would make it less attractive for banks to use ABS as collateral and would push up the overall cost of borrowing funds from the central bank.
WAVE OF RISK AVERSION
European currencies extended their recent decline on concerns that economies outside the United States are deteriorating, especially in Europe -- which is facing recession.
The euro had fallen to a 10-month low of $1.4212 on the EBS system while sterling hit a 12-year low on a trade-weighted basis.
The low-yielding yen surged to a 13-month high around 150.60 per euro while it hit two-year lows against the Australian and New Zealand dollars. The dollar fell 0.15 percent against a basket of major currencies.
"Position unwinding is taking place globally and it is becoming a big wave," said Tokichi Ito, deputy general manager of foreign exchange at the Trust & Custody Services Bank in Japan.
Emerging sovereign spreads widened 5 basis points to trade 326 basis points above U.S. Treasuries. Emerging stocks lost 1.7 percent.
The September Bund future rose 13 ticks, benefiting from flows into safe-haven government bonds.
Concerns that the slowing economy would hit energy demand weighed on U.S. light crude, which fell 1 percent to $106.85 a barrel. Gold ticked higher to $796.60 an ounce.
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(UPI) –Job layoffs slowed in the United States in August, but the
summer's total for 2008 exceeded any summer since 2002, a job consulting firm
said Wednesday.
U.S. employers announced 88,736 job cuts last month, a 14 percent decline
from July's 103,312 announced cuts, employment researchers at Challenger, Gray
& Christmas said Wednesday.
But, the monthly report said the May-August total of 377,325 job-cut
announcements was 30 percent higher than the first four months of the year. The
year-to-date total of 667,996 job cuts is a 29 percent increase over the first
eight months of 2007, the report said.
"At the current pace, job cuts will surpass last year's 12-month total by the
middle of October and could exceed 1 million for the first time since 2005," the
report said.
"Hopes of a late summer reprieve in layoffs were dashed by heavy downsizing
in the automotive and government sectors, where employers announced 17,233 and
12,328 job cuts, respectively," said Challenger Chief Executive Officer John
Challenger.
"We have not seen this level of summer job cutting since 2002, when the
country was still struggling to recover in the wake of the 2001 recession and
Sept. 11," Challenger said.
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NEW YORK (Reuters) - Stocks rose on Tuesday as a sharp drop in oil prices buoyed hopes of a recovery in consumer and business spending, key pillars of profit growth.
Gains were broad-based, with shares of airlines, big manufacturers and consumer-oriented companies, including McDonald's Corp, among the standouts.
Financial, technology and home builder stocks also notched notable advances as investors pulled money out of energy stocks and bought beaten-down sectors.
Diversified manufacturer General Electric's shares, up nearly 3 percent to $29, were a top boost to the S&P 500, while plane maker Boeing gained 3 perc
ent to $67.58.
Goldman Sachs reinstated coverage of Bank of America with a "buy" rating, pushing its stock up nearly 5 percent to $32.66 on the NYSE.
"Oil has decisively broken below its 200-day moving average and has taken all commodities with it," said Ted Oberhaus, manager of equity trading Lord Abbett & Co. in Jersey City, New Jersey. "The bubble has burst.
That's been one of the reasons that equities have been held in check."
The Dow Jones industrial average rose 176.03 points, or 1.52 percent, to 11,719.58. The Standard & Poor's 500 gained 12.83 points, or 1.00 percent, to 1,295.66. The Nasdaq Composite Index shot up 27.35 points, or 1.16 percent, to 2,394.87.
U.S. crude fell 6.9 percent to $107.50 a barrel.
The slide in oil prices came after a rally in the U.S. dollar and news that Hurricane Gustav had spared major Gulf oil facilities.
Lower oil prices also eased inflationary pressures at a time when the Federal Reserve is working to revive economic growth by keeping interest rates low.
Shares of Lehman Brothers rose 3 percent to $16.56 after state-owned Korea Development Bank (KDB) confirmed it was in talks with Lehman over a possible joint investment in the U.S. bank with other Korean banks.. The S&P financial index was up 2 percent.
Among airlines, shares of UAL Corp, parent of United Airlines, rose 16 percent to $12.90 on Nasdaq, while the airline index surged 9 percent.
Shares of fast-food company McDonald's rose 2.7 percent to $63.67 on the New York Stock Exchange.
Retailer Target Corp's shares jumped 3.4 percent to $54.84. The S&P retail index gained 3.6 percent.
Tech stocks higher included Apple Inc, up 1.8 percent at $172.55 and a major boost to the Nasdaq. Shares of Google Inc rose 3.3 percent to $478.44 following news that the Web search leader is set to introduce a new Web browser designed to more quickly handle video-rich or other complex Web programs.
Among home builders, shares of Pulte Homes rose 3.1 percent to $14.96. The Dow Jones home construction index was up 3 percent.
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