(Updates with jobs data, Fed action)
By Jeremy Gaunt, European Investment Correspondent
LONDON, March 7 (Reuters) - Fears of recession and credit
failure battered global stocks and the dollar on Friday as sharp
U.S. job losses and Federal Reserve attempts to boost liquidity
painted a bleak picture of the world's largest economy.
The dollar was at record lows against major currencies.
Wall Street looked likely to open sharply lower and European
stocks were down more than 1.5 percent after the U.S. Labor
Department said U.S. employers had cut their payrolls for a
second straight month during February.
U.S. employers slashed 63,000 jobs, the biggest monthly job
decline in nearly five years.
Just before the report was released the Fed announced a
number of measures to ease liquidity pressures in stressed
financial markets, a move which led to some concern that market
problems are worse than initially believed.
"This confirms the fears that have been lurking
in the financial markets in recent weeks. The probability of a
U.S. recession is at more than 50 percent. The Fed has to be
more aggressive," said Richard Dekaser, chief economist at
National City Corp. in the U.S. city of Cleveland.
The U.S. news piled pressure onto investors who had already
been selling riskier assets and seeking safety.
MSCI's main world stock index <.MIWD00000PUS>, a benchmark
for many professional investors, lost around 1 percent while its
emerging market counterpart <.MSCIEF> sank 2.3 percent.
The pan-European FTSEurofirst 300 <> was down nearly
1.8 percent. Earlier, Japan's Nikkei average <> closed down
3.27 percent.
As well as fear about U.S. recession and its possible
spillover to the rest of the world, investors got a sharp
reminder on Thursday about continuing credit worries with news
that Thornburg Mortgage Inc <TMA.N>, a "jumbo" U.S. mortgage
lender, was in default after failing to meet creditor demands
for more upfront cash.
Another report that day showed U.S. mortgage foreclosures
hit a record high in late 2007.
SINKING DOLLAR
The dollar tumbled to all-time lows again, with the euro
<EUR=> powering to $1.5459 before easing back slightly to around
$1.5390.
The euro was boosted by the European Central Bank's signal
on Thursday that it was in no hurry to start cutting interest
rates in a month when the U.S. Federal Reserve is expected to
slash them by 75 basis points.
The dollar also fell to an all-time low against the
so-called dollar index <.DXY>, a trade-weighted basket of six
major currencies, at 72.462 before lifting itself slightly. It
has lost nearly 19 percent against this index over the past two
years.The greenback also set an 8-year low around 101.44 yen
<JPY=>.
All this drove investors into safe havens. Benchmark 10-year
Treasury yields <US10YT=RR> fell 7 basis points to 3.5204
percent. Two-year euro zone government bond yields <EU2YT=RR>
were down 10 basis points at 3.222 percent as prices rose on
demand.
The benchmark 10-year bond yield <EU10YT=RR> was down 4
basis points at 3.759 percent.
Demand for gold remained strong at around $979 an ounce,
although it was off its record high of $991.90 hit during the
day on Thursday.
Oil prices eased about 50 cents a barrel but were still at
near-record highs above $104 a barrel.
