NEW YORK Global stocks swooned and crude oil tumbled on Friday after a weak U.S. jobs report and data that suggested a deeper recession across the euro zone than previously thought dented sentiment.
Major U.S. and European stock indexes fell more than 1 percent, U.S. crude oil slumped about 4 percent and government debt prices jumped after the Labor Department said American employers reduced hiring more than expected in April.
The week was the worst this year for Wall Street stocks, with energy leading the decline. The S&P energy index .GSPE of 44 gas and oil-related companies fell 2.2 percent on fears a worsening economy would sap demand.
"We have broken through key technical levels here after a disappointing employment report and the PMI number from Europe which suggest that the recovery is stalling and could affect energy consumption," said Gene McGillian of Tradition Energy.
Just 115,000 workers were added to payrolls last month, or 55,000 less than economists expected. While the unemployment rate fell one-tenth of a point to 8.1 percent, a three-year low, that was only because the workforce shrank as people retired or stopped seeking work.
The third straight monthly decline in hiring growth spurred concerns that the U.S. economy is losing momentum and doused hopes that a stretch of strong winter hiring had signaled a turning point for the U.S. recovery.
The Dow Jones industrial average .DJI closed down 168.32 points, or 1.27 percent, at 13,038.27. The Standard & Poor's 500 Index .SPX fell 22.47 points, or 1.61 percent, at 1,369.10. The Nasdaq Composite Index .IXIC slid 67.96 points, or 2.25 percent, at 2,956.34.
The U.S. jobs data added to the gloomy tone from Europe, where purchasing managers' indexes, primarily covering services, suggested a recession across the euro zone could extend to mid-year and be deeper than previously imagined.
Markit's Eurozone Services PMI, which gauges business activity over a month, came in at 46.9 for April, sharply lower than 49.2 in March. Anything below 50 signifies contraction.
The JPMorgan Global Purchasing All-Industry Output Index of about 20 countries showed declines in April from March.
In Europe, the pan-European FTSEurofirst 300 .FTEU3 index closed down 1.7 percent at 1,027.15, and the Euro STOXX 50 index fell 1.7 percent to 2,248.34 .STOXX50E, despite strong earnings from Royal Bank of Scotland (RBS.L), BNP Paribas (BNPP.PA) and Lafarge LAFP.PA.
MSCI's all-country world equity index .MIWD00000PUS fell 1.5 percent to 321.72.
Benchmark Brent crude in London fell to three-month lows around $113 a barrel, its steepest weekly fall since December, after the weak jobs report. Brent's slide took three-day losses to more than 5 percent.
While the downbeat data weighed, traders said a combination of less-definitive factors - from confusion over margin changes to the breach of the 200-day moving average - compounded selling.
Brent futures settled down $2.90 at $113.18 a barrel, lows last seen in early February.
U.S. crude settled down $4.05 at $98.49 a barrel.
Some analysts said the jobs report, which followed weaker-than-expected services sector data this week, will fuel hopes for a third round of stimulus, or quantitative easing, by the Federal Reserve to keep rates low and to foster growth.
"The data in the U.S. is weakening somewhat. It puts into play that if the economy in the U.S. continues to weaken then QE3 will be on the table, so there are really no sellers of Treasuries," said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York.
The benchmark 10-year U.S. Treasury note rose 16/32 in price to yield 1.88 percent, and the 30-year U.S. Treasury bond gained almost a full point in price to yield 3.07 percent.
Gold rose as the weak data boosted bullion's investment appeal on talk that a weaker economy might prompt further monetary easing by the Fed.
U.S. gold futures for June delivery settled up $10.40 an ounce at $1,645.20.
The dollar slipped against the yen in volatile trading after the payrolls number, with the U.S. currency down 0.45 percent at 79.83 yen.
The U.S. dollar index .DXY rose 0.33 percent at 79.481.
The euro was down 0.47 percent at $1.3088.
(Additional reporting by Richard Leong, Ryan Vlastelica, Julie Haviv, Matthew Robinson and Jonathan Leff, Reporting by Herbert Lash, Editing by James Dalgleish and Dan Grebler)