Flight From Risk As World Stock Values Tumble
Stock markets across Europe have endured sharp losses as investors seek safe havens amid worries about the UK's Brexit referendum and the global economic outlook.
The FTSE 100 closed 1.9% or 116 points lower at 6115 while falls in wider European stock markets were even more significant.
Frankfurt and Paris both lost more than 2% while the MIB in Milan and the IBEX in Madrid shed more than 3%.
Money was placed in highly-rated bonds instead - with the UK and German 10-year yields at new record lows.
The 10-year German Bund had a zero yield firmly in its sights at 0.022% on Friday morning as banking stocks took a hammering on growing expectations the US Federal Reserve will hold off raising interest rates next week amid domestic weakness and global uncertainties.
Interest rates on sovereign debt have been low for some years as central banks have been snapping up government bonds from investors in an effort to boost economic output through increased liquidity.
Bonds are seen as a safe haven as the rate of return - or yield - is known at the time of the purchase.
UniCredit (EUREX: DE000A163206.EX - news) strategist Luca Cazzulani said of the bond-buying activity: "It (Other OTC: ITGL - news) is the combination of the renewed Brexit concerns and last week's weak payrolls (US job numbers) that have reduced Fed (rate hike) expectations.
"The chance of seeing a print below zero is clearly material at this point... ahead of the UK referendum it is very unlikely that investors will want to change their positions much."
In addition to banking stocks, commodity shares also fell sharply in line with oil and other commodity costs which lost ground amid growing signs of nerves over the health of the US and eurozone economies.
The US job figures for May showed just 38,000 net new jobs were created in May - its weakest level for more than five years.
Investors were also spooked by comments earlier this week by European Central Bank (ECB) president Mario Draghi that euro area governments must do more to support economic growth - interpreting that as an admission the ECB is running out of tools to prop up growth.
The pound also lost further ground against both the dollar and the euro.
US stock markets were down in early trading - led by banks and energy shares.
