Global stocks rout on investors' fears over world economy

World stock markets were hammered with heavy losses on Friday, as China's economic woes triggered European and Wall Street equity sell-offs and stirred up fears for global growth.

In Europe, London's benchmark FTSE 100 index sank 2.83 percent to close at 6,187.65 points, falling for the ninth consecutive day and wiping £160 billion off the value of UK-listed companies, analysts said.

The CAC 40 in Paris plunged 3.19 percent to end the day at 4,630.99 points, and Frankfurt's DAX 30 lost 2.95 percent to finish at 10,124.52 points.

Markets in several other eurozone countries also lost nearly or over three percent including Amsterdam, Brussels, Milan and Madrid.

"China's currency devaluation is at the heart of the rout in global markets so another drop in Chinese stocks (Friday) translated to losses across other benchmark indices," said Jasper Lawler, market analyst at CMC Markets UK.

"The European indices are following the American markets which are in sharp decline after having resisted rather well up to now," said Alexandre Baradez, analyst at IG France.

US shares headed sharply lower for a third day on Friday. Around midday in New York, the Dow Jones Industrial Average was down 1.38 percent, the S&P 500 lost 1.78 percent and the tech-heavy Nasdaq Composite sank 2.06 percent.

"Panic selling has hit US stock markets which tanked on the open as global growth concerns continued to weigh on sentiment following disappointing Chinese economic data," said Lawler.

- 'Catching falling knives' -

Weak Chinese manufacturing data gave Asian stock markets a heavy knock Friday, adding to fears about the health of the world economy.

Shanghai shares closed down 4.27 percent at 3,507.74 points, ending their worst week since 2011 as worries over the flagging Chinese economy and the possibility of weaker government support weighed on sentiment.

Hong Kong fell 1.53 percent to finish the day at 22,409.62 points -- its lowest point since May 2014. Tokyo shares fell 2.98 percent to 19,435.83, a more than three-month low, down 5.28 percent on the week.

"With more Chinese-led carnage on the markets today only the very brave are venturing into equities as buying stocks is currently like catching falling knives," said Mike McCudden, head of derivatives at stockbroker Interactive Investor.

Meanwhile on foreign currency markets, the dollar slipped against the euro after the US Federal Reserve earlier this week dampened expectations of a US interest rate rise next month.

The euro jumped to $1.1354 -- after earlier hitting $1.1363, its highest level in two months -- from $1.1141 late on Thursday in New York.

The European single currency strengthened despite renewed unrest in Greece, where Prime Minister Alexis Tsipras announced his resignation on Thursday and called for snap elections.

Tsipras went on the offensive to defend the country's massive bailout after it triggered a rebellion within his own hard-left party.

A leader who remains popular with the electorate, Tsipras had been widely expected to call polls in a bid to regain office with a stronger hand.

"Having secured... funding to help pay the ECB yesterday and also help recapitalise the banks the path now remains clear for the still fairly popular Greek prime minister to refresh his mandate," Hewson added.

Tsipras' announcement came on the same day the debt-crippled country received its first 13 billion euros ($14.7 billion) in bailout cash, effectively starting the mammoth rescue package agreed to last month, worth around 86 billion euros over the next three years.

The money arrived just in time to allow the Greek government to make a key debt repayment of 3.4 billion euros to the European Central Bank.

Athens' main stocks index on Friday sank 2.49 percent to close at 635.31 points.

burs-boc/gj