Global stocks tumble amid recession fears

In Europe, major markets were firmly in the red once again, although stocks were regaining some ground from earlier in the day. London’s FTSE 100 declined 2.1 percent to 5,282 and Germany’s DAX shed 1.8 percent to 6,300. France’s CAC-40 lost 0.3 percent to 3,309.

Only Spain’s Ibex and Italy’s FTSE MIB were in positive territory, with Spanish stocks gaining 1.2 percent while Italian shares were up 1.1 percent, even though figures showed both economies barely grew in the second quarter of the year.

Wall Street was set for a lower open with Dow futures down 0.5 percent at 11,317 while S&P 500 futures fell 0.3 percent to 1,195.

Falling stocks are a sign of diminishing confidence in the global economy and that’s being felt in oil prices too. The main New York contract was down a further 83 cents a barrel at $85.80 a barrel, having earlier dipped below $85.

Investors around the world are waiting anxiously for U.S. employment figures this afternoon, which could give a firm indication on whether the world’s largest economy is indeed headed for a double-dip recession. Analysts expect payrolls to increase by 85,000 and the jobless rate to remain at 9.2%.

“If we get a strong jobs report, this could be enough to send stock markets higher — the relief rally we are looking for — but given the depth of the economic crisis facing the developed world, I am not sure how long such a relief rally will last,’’ said Louise Cooper, markets analyst at BGC Partners. “A poor number could see further declines.’’

The protracted debate about raising the debt ceiling in the U.S. and confusion about Europe’s strategy to fight its worsening debt crisis have undermined confidence in policy makers’ willingness and ability to finally draw a line under the financial troubles that have plagued the Western world for four years.