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You Are Here: Home» World News » European markets continue global sell-off 3 August 2011 Last updated at 11:16 GMT

Traders in Frankfurt 
European shares have lost ground in early trading, following falls in the US and Asia, as concerns grow about the health of the global economy.
London was down 1%, with Frankfurt and Paris both losing about 0.5%.
In New York, the Dow Jones closed down 2.2% on Tuesday after official figures showed a fall in US consumer spending for the first time in nearly two years.
Meanwhile, the price of gold, seen as a safe investment in times of economic uncertainty, hit a new record high.
The precious metal touched $1,668 an ounce in early trading.
The Swiss franc, which is also seen as a safe investment and has risen sharply in recent weeks, fell almost 2% against the euro and 1% against the dollar after the Swiss National Bank lowered its target for inter-bank lending in an attempt to lower demand for the currency.
Oil prices also fell in Asian trade, with US light sweet crude for September delivery easing 49 cents to $93.30 a barrel and Brent crude dropping 65 cents to $115.81.
Earlier, Asian markets lost ground, with Japan's Nikkei closing down 2.1% and Hong Kong's Hang Seng down 1.9%.
Government bond yields in Spain and Italy also rose, indicating a rise in the risk associated with lending to the two countries.
Figures also released on Wednesday suggested a slowdown in growth in the eurozone services sector.
The closely-watched Markit Services PMI index fell to a near two-year low of 51.6 in July, down from 53.7 in June. Any score above 50 indicates expansion.
Shifting worries
US lawmakers managed to avoid a debt default on Tuesday by raising the debt ceiling. However, analysts say there has been a sharp change in global focus from the US debt issues.
"Disappointing economic data on both sides of the Atlantic, as well as surging Italian and Spanish bond yields, has seen risk appetite plummet as pessimism about the global recovery starts to take hold with a vengeance," said Michael Hewson at CMC Markets in London.
Koichi Ono from Daiwa Securities Capital Markets in Tokyo said: "I think the conditions have completely changed this week.
"Until last week, people have been saying the US debt ceiling was the problem. Now they talk about worries about the health of the economy."
This was underscored by official data which came out on Tuesday, showing a fall in US consumer spending for the first time in nearly two years.
The figures also showed that incomes had barely risen, indicating that the economy was stalling in the first half of this year.
Euro pressures And it is not just the US dragging down markets, say analysts.
Just as the US debt crisis seems to be subsiding, the European crisis has come back into focus.
Spain and Italy are under renewed pressure because of concerns that the eurozone bailout fund is not enough to protect their larger economies if they can no longer pay their debts.
Bond yields, or the interest that countries pay on their loans, have risen sharply in recent days.
"It's a pretty bleak picture," said Justin Gallagher of RBS in Sydney.
"The implications for the Italian market and economy going through something similar to Greece is pretty frightening. People are suggesting it's not bailout-able. That's how big it is."
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