4.45pm GMT update US jobless figures up as economy suffers severe downturn
Shares went into sharp retreat on both sides of the Atlantic today as gloomy jobs data from the United States heightened fears over prospects for the global economy.
On Wall Street, the Dow Jones Industrial Average tumbled more than 180 points, taking it below the 13,000 level. In London, earlier gains were wiped out, with the FTSE 100 index trading more than 140 points down towards the close.
Unemployment in the US rose to its highest level in more than two years last month as the job-creation machine in the world's biggest economy virtually ground to a halt, according to figures released in Washington today.
The Labor Department prompted fresh speculation on Wall Street that the Feberal Reserve would cut interest rates later this month when it said the jobless rate rose from 4.7% to 5% in December. It also sent the FTSE 100 index down into negative territory, wiping out earlier gains, and pushed the dollar down against a range of currencies including sterling.
Employers added a mere 18,000 jobs last month - the weakest performance by non-farm payrolls since 2003, when the economy was starting to recover from the short-lived recession that followed the collapse of the dotcom bubble.
Economists had expected 70,000 jobs to be created last month, and bond prices rallied immediately after the announcement by the Labor department in anticipation that the Federal Reserve will cut interest rates for a fourth time in a row at the end of this month.
Pierre Ellis, senior economist at Decision Economics in New York said: "The bond market rallied because the unemployment rate moved up in a shocking way and that's the sort of political dynamite that may make the Fed more prone to easing than otherwise."
President Bush was meeting with the Fed chairman, Ben Bernanke, and the treasury secretary, Hank Paulson, today to discuss ways of boosting the economy.
A breakdown of today's official US data showed that during December, manufacturing industries shed 31,000 jobs and construction businesses cut another 49,000. There were 31,000 more government jobs creater and 44,000 were added in education and health services, but retail industries cut more than 24,000 jobs.
Weekly hours of work were unchanged at 33.8 in December but overtime hours dropped to 3.9 from 4.1 in November.
Unemployment in the United States rose sharply last month and government figures released late Friday show the number of new jobs was at its lowest level in four years. President Bush is considering more tax cuts in an effort to boost the nation's sagging economy.

American unemployment rose to five percent last month, the highest rate since 2005 and new employment statistics released Friday show the U.S. economy added only 18,000 new jobs in December, far fewer than most economists expected.

"This economy of ours is on a solid foundation, but we can't take economic growth for granted, and there are signs that will cause us to be ever more diligent and make sure good policies come out of Washington," he said.

The president says consumer spending is still strong and core inflation is low, but home values are declining and gasoline and food prices are rising.

Mr. Bush warned opposition Democrats in Congress against raising taxes, saying that is the worst thing lawmakers could do. But he did urge them to pass legislation that could help more Americans refinance their homes.

"When Congress comes back, I look forward to working with them to deal with the economic realities of the moment and to ensure the American people that we will do everything we can to make sure we remain a prosperous country," he added.

The ongoing financial crisis over adjustable-rate mortgages continues to affect the overall economy and not just home sales.  There has been a cut in jobs in the building industry and the Labor Department report also shows a drop in factory jobs.

President Bush is considering an economic stimulus package that could include more tax cuts. In a Thursday interview with the ''Reuters'' news service, Mr. Bush said he and his economic team are considering all their options and he probably will not decide whether to act until his State of the Union Address later this month.

Democratic Senator Charles Schumer is urging the president to take action to avoid what the lawmaker says could be the economy tumbling into recession.