World Stocks Fall On Drop In US Consumer Spending

LOUISE WATT

LONDON (AP) — European and U.S. stock markets fell Friday after data showing American consumers are still holding off on spending underscored the fragility of a recovery in the world's largest economy.

Germany's DAX closed down 3.1 percent to 5,414.96, Britain's FTSE 100 shed 1.8 percent at 5,044.55 and France's CAC 40 slid 2.9 percent to 3,607.69.

In early afternoon trading in New York, the Dow Jones industrial average was 2.0 percent lower at 9,768.28 and the Standard & Poor's 500 index lost 2.2 percent at 1,043.20.

U.S. consumer spending plunged in September by the largest amount in nine months, reflecting the end of the government's "Cash for Clunkers" car rebate program. Incomes, the fuel for future spending, were flat.

Markets had made strong gains Thursday after the U.S. government reported that the economy grew by 3.5 percent in the July-September period, signaling the end of the worst recession in seven decades. But the weakness in spending and incomes as the quarter ended tempered enthusiasm Friday.

"It seems that while the U.S. economy may be exiting the recession, investors would be wise to take heed of President Obama's comments yesterday that the U.S. has a 'long way to go' before a full recovery is seen in the market place," said Philip Gillett, sales trader at IG Index.