LONDON (AP) — World stock markets fell sharply Thursday after worse than expected U.S. jobs data reined in investor hopes of a swift end to recession.



In Europe, the FTSE 100 index of leading British shares closed down 106.44 points, or 2.5 percent, to 4,234.27 while Germany's DAX fell 186.95 points, or 3.8 percent, to 4,718.49. The CAC-40 in France was 100.59 points, or 3.1 percent, lower at 3,116.41.



On Wall Street, the Dow Jones industrial average was down 176.84 points, or 2.1 percent, at 8,327.22 around midday New York time while the broader Standard & Poor's 500 index fell 20.90 points, or 2.3 percent, to 902.43.



Early selling pressure was amplified by the news from the U.S. Labor Department that the U.S. economy shed 467,000 jobs in June, nearly 100,000 more than anticipated, and way more than the 322,000 decline in May.



June's jobless figures brought an end to a run of five straight months of improvements and dampened expectations that the U.S. economy was poised for a strong recovery soon.



Though the headline payrolls number fell by more than anticipated, the unemployment rate did not rise as much as expected but still hit a 26-year high of 9.5 percent. Some economists were predicting it would rise to 9.7 percent.



Nevertheless, the headline payrolls data weighed on markets as it provided ample evidence to investors that any recovery will be a long, hard slog.



"The heavy loss of jobs in June is a warning that the road to recovery will be bumpy, but doesn't yet indicate that we have gone off the track," said Nigel Gault, chief U.S. economist at IHS Global Insight.



Jobs data were downbeat in Europe as well, as unemployment in the 16 countries that use the euro spiked to a ten-year high in May, reinforcing concerns that any recovery will take time with so many people out of work.



Eurostat, the statistics office of the EU, said the seasonally-adjusted unemployment rate for the euro zone in May was 9.5 percent, up from April's 9.3 percent.



Since unemployment is a lagging indicator, the number of jobless will likely continue to rise for a while even when the recession officially ends. Despite recent hopes that the global economic downturn may be easing, investors are fully aware that high unemployment levels will continue to weigh on consumption and sentiment for many months and years.



As the payrolls news came, European Central Bank president Jean-Claude Trichet was holding his monthly press briefing following the governing council's decision to keep its interest rate unchanged at the record low of 1 percent.



Trichet noted some early signs of economic improvement while maintaining his view that recovery will take time and that the central bank will continue trying to get banks to lend again by massive injections of liquidity.



Stocks around the world managed to achieved one of the best quarters in years during the second quarter — the S&P; 500 index in the U.S., for example, rose around 16 percent during the quarter, its best performance since 1998 — amid hopes of a recovery around the world despite ongoing worries about the global banking system, public finances and the length and depth of the recession.



Earlier, most Asian markets fell, with Tokyo's Nikkei 225 stock average closing down 63.78 points, or 0.6 percent, at 9,876.15, while Hong Kong's Hang Seng fell 200.68 points, or 1.1 percent, to 18,178.05.



Elsewhere, Korea's Kospi closed flat in back-and-forth trade. Markets in Australia and Shanghai gained while Taiwan's benchmark rose 1.4 percent.



Oil prices dropped below $67 a barrel after the payrolls data dampened expectations that the U.S. economy would recover quickly and boost energy demand. Benchmark crude for August delivery was down $2.38 at $66.93 a barrel.



By late afternoon London time, the dollar was down 0.5 percent at 96.04 yen while the euro fell 1 percent to $1.4007.



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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.



Copyright 2009 The Associated Press.