EUROPE (NEWS1130) – World stock markets slid earlier this morning as investors fretted about Europe’s debt crisis and worries persisted over a slowdown in China.

A batch of downbeat news the past few days about Europe and China undermined investor sentiment that is already fragile from the downgrade of global economic growth forecasts, unleashing a sell-off in markets.

The financial pressure on Spain ratcheted up further, with the interest rate on the country’s key 10-year bond at levels that saw other European nations needing a financial bailout.

The euro sank to a near 12-year low against the yen and also lost ground against the dollar, reflecting continued doubts about the durability of the European common currency.

In early European trading, Britain’s FTSE 100 shed 1.4 per cent to 5,571.69 and France’s CAC 40 lost 1.7 per cent to 3,318.33. Germany’s DAX was down 1.3 per cent at 6,544.24. Futures augured losses on Wall Street with the Dow and S&P 500 futures both down 0.9 per cent.

On Friday, stocks in Italy and Spain plunged over four per cent and five per cent each after another Spanish region said it might seek financial aid from the government, adding to nagging concerns about Europe’s debt crisis.

A forecast from a Chinese central bank adviser that China’s economy could wane further in the third quarter also deepened concerns about the global slowdown. China’s economic growth slowed to a three-year low of 7.6 per cent in the second quarter.

Japan’s Nikkei fell 1.9 per cent to 8,508.32 and Hong Kong’s Hang Seng dived three per cent to 19,053.47. China’s Shanghai Composite Index shed 1.3 per cent to 2,141.40.

South Korea’s Kospi dropped 1.8 per cent to 1,789.44 and Taiwan’s Taiex fell 1.9 per cent to 7,028.73. Australia’s S&P/ASX 200 was off 1.7 per cent at 4,128.90.

Benchmark crude for September delivery was down $2.61 to $89.23 a barrel in electronic trading on the New York Mercantile Exchange.

In currencies, the euro was down 0.4 per cent at $1.211 and against the Japanese currency it fell one per cent to 94.46 yen, its lowest since late 2000. The dollar fell 0.5 per cent to 78.07 yen.