European stocks closed in the red on Friday as traders continue to digest the outlook for the global economy following a hotter-than-expected US non-farms job report.
In London, the FTSE 100 (^FTSE) fell 0.2% at close, a day after Fitch joined other credit ratings agencies forecasting a dim outlook for the economy as it lowered the credit outlook for British government debt to "negative" from "stable".
"Worries are firing in from all fronts following the latest robust snapshot on the US labour market," Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown said.
"Investors are simultaneously fretting that the fall in the pace of hirings indicates a slowing economy, but also that the better than expected data shows that the jobs markets hasn’t slowed enough to stop the Fed from hiking rates aggressively."
Meanwhile. Britain's higher borrowing costs appear to have had an impact on the property market after Halifax said average house prices declined by 0.1% in September. Annual growth fell to 9.9% from 11.4% in August.
It comes as Bank of England (BoE) has said that its £65bn ($73bn) intervention in the gilt market last week saved the UK from being on the brink of a financial crisis.
A letter from Sir Jon Cunliffe, deputy governor of the BoE, highlighted that there was fear of “severe disruption of core funding markets and consequent widespread financial instability.”
Cunliffe added that pension funds would have been forced to dump £50bn worth in government bonds into a chaotic market.
Across the Atlantic, Wall Street indices lost steam, opening lower on Friday after the latest jobs data escalated recession fears and higher-for-longer interest rates bets.
Non-farm payrolls increased by 263,000 in September, compared to a consensus estimate of around 250,000, whereas in August hirings rose by 315,000.
The unemployment rate came in at 3.5%, down from 3.7%, highlighting how resilient the labour market still is to the ramping up in rates.
"The 263,000 gain in non-farm payrolls in September is another signal that labour market conditions are cooling," said Andrew Hunter, senior US economist at Capital Economics. "But with the unemployment rate dropping back to 3.5% the report is unlikely to significantly alter the Fed’s view that the labour market is out of balance."
Asian markets closed lower overnight as a global rally ran out of steam.