London - AFP
World stock markets tumbled on Wednesday as relief over a US debt deal gave way to renewed fears about weakening economic growth, sending \'safe-haven\' gold to fresh record highs.Analysts said that a resurgence in concerns that the eurozone debt crisis remains a real threat to Italy and Spain added to the negative tone after days of sustained and heavy losses. \"It is clear that despite strides to address the debt problems of both the US and Europe, uncertainty persists,\" said Juliet Tennent, an economist at Goodbody Stockbrokers in Dublin. \"The fear is that US austerity measures will provide another headwind to already sluggish economic growth ... Meanwhile, despite numerous attempts the European authorities have still not done enough to satisfy a sceptical bond market and the (eurozone) debt crisis looks far from over.\"In early European trade, London\'s benchmark FTSE 100 index shed 1.10 percent, Frankfurt lost 0.80 percent, Paris fell 0.86 percent -- but Madrid was up 0.28 percent in a modest technical rebound after recent sharp losses there.On the forex markets, the euro was higher at $1.4235 while gold hit a record $1,672.95 an ounce.\"Traders continue to recycle funds out of risky asset classes such as mining, oil and banking stocks, and move these funds into the typical safe haven asset plays such as gold,\" said Joshua Raymond, chief market strategist at City Index traders.European peripheral nations \"also saw bond yields continue to rise as fears grew over potential contagion of sovereign debt with both Italian and Spanish 10-year bond yields remaining stubbornly above the 6.0 percent mark.\"Investors were selling the government debt amid slowing economic growth in Italy, the third-biggest eurozone economy, and fourth-biggest Spain in a crisis that could ultimately threaten the euro.Across the Atlantic, US President Barack Obama on Tuesday signed an emergency austerity bill that averted a debt default for the world\'s biggest economy.Asian stock markets plunged on Wednesday, with Tokyo dropping 2.11 percent, Sydney losing 2.27 percent and Seoul giving up 2.59 percent.The red numbers in Asia followed similar losses on Wall Street, where markets fell for an eighth straight session on Tuesday, the longest losing streak since the beginning of the global financial crisis in October 2008.The Dow sank 2.19 percent, the S&P 500 retreated 2.56 percent and the tech-heavy Nasdaq declined 2.75 percent.The Nasdaq and S&P 500 both closed below where they started the year while the Dow is at its lowest since mid-March.Investors were unmoved by news that both Moody\'s Investors Service and Fitch affirmed the US\'s top-notch credit rating after the 11th-hour deal to avert a default, looking more to warnings about a possible rating downgrade if Washington does not deliver more.As US default fears lifted, attention turned to the economic outlook and traders were spooked, with a report showing US consumer spending declined in June, the first drop in nearly two years, suggesting the economy is stalling.That followed data showing manufacturing virtually stationary in the United States as well as across Europe and Asia.