Worse than expected US nonfarm payroll data released late on Friday added to negative investor sentiment.

Vestact Asset Management’s Sasha Naryshine said markets could be expected to remain volatile this week if the data weakened sentiment any further. “Any positive figure could mean we will see some of the bloodletting … stop a bit (and vice versa),” he said.

US employers unexpectedly cut 20 000 payrolls last month, but the jobless rate fell to a five-month low of 9,7%. The US labour department said 150 000 jobs were shed in December, against 85 000 previously reported. Forecasts had payrolls gaining 5000 and last month’s jobless rate up to 10,1% from10%.

The US economy resumed growth in the second half of last year and the labour market healing is crucial for a sustainable economic recovery.

Also continuing to weigh on markets on Friday was concern about sovereign risk in Greece, Portugal and Spain, as evidenced by the soaring credit default swaps to these countries, which insure against sovereign risk.

“It is extremely unlikely that these stressed states can come through this crisis without severe austerity measures, either higher taxes or drastically reduced public spending,” Investec Asset Management noted in its daily view publication. “Less spending, however, means less growth and this seems to be weighing on the euro more than the risk of debt default by these stressed economies.”

Asian stocks fell to near five-month lows on Friday as investors dumped riskier assets after rising sovereign debt problems in the euro zone and poor jobs data sent US and European stocks tumbling. The same factors had caused global stocks to slide on Thursday as well.

The Nikkei closed 2,88% lower on Friday, while the Hang Seng was 3,3% down. With Reuters