Stocks set to follow Europe sharply lower

By msnbc.com news services

The troubles of the euro zone remain a focus for Wall Street Friday, as investors digest the latest economic data from the region.

Unemployment the euro zone was 11 percent in April. The figure was unchanged from March, but still at the highest level since records started in 1995. Spain?s had the highest rate in the region at 24.3 percent.

Treasury yields hit their lowest level in hundreds of years and global stock indexes dropped toward 2012 lows as investors scrambled for lifelines amid worries about Spain's parlous finances and China's growth outlook.

Chinese demand seen slowing, record after record has tumbled across asset classes as investors seek security for their cash.

The German two-year bond yield fell below zero for the first time, meaning investors are paying for the right to hold that debt. Other "safe havens" Denmark and Switzerland said they were prepared to set negative interest rates to prevent their currencies spiraling.

Oil fell below the psychologically key level of $100 a barrel, striking an eight-month low.

"We've had constant worries about Greece, Spain, the euro, poor data from the U.S., and overnight the Chinese data was not positive," said Tony Machacek, an oil futures broker at Jefferies Bache.

Investors are also bracing for U.S. employment data, which is forecast to show a 150,000 rise in non-farm payrolls in May. London-based investors were also adjusting positions ahead of market holidays on Monday and Tuesday.

The euro hit its lowest against the dollar in nearly two years at $1.2316 while 10- and 30-year German Bund yields hit all-time lows. The dollar index rose to a 21-month high.

Madrid's need to recapitalize its troubled banks and shore up its heavily indebted regions is the latest focus for turbulent markets, though IMF Managing Director Christine Lagarde denied late on Thursday that the Fund was preparing financial assistance for Spain.

Spaniards alarmed by the dire state of their banks are squirreling money abroad at the fastest rate since records began, figures showed on Thursday.

The gloomy economic news was not confined to Europe.

Weighing on the global demand outlook, China's official purchasing managers' index fell to 50.4 in May from April's 13-month high of 53.3.

Earlier, European stocks fell 1.3 percent to their lowest levels this year.

Reuters contributed to this report.

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