Markets down as stocks slide again

(CNN) -- Global stock markets continued to struggle on Friday a day after worries over housing and credit markets in the U.S. sent share prices plunging on Wall Street.

In the U.S., the Dow Jones -- which shed 311 points on Thursday -- slipped further in early trading Friday, down around 1 percent in the opening three hours of trading, while the wider S&P 500 and the tech-heavy Nasdaq were both down around 0.9 percent.

In Europe, where markets suffered their worst losses in five months on Thursday, the FTSEurofirst 300 index closed down 0.5 percent -- and down 5 percent for the week -- having earlier showed signs of a recovery amid robust corporate results led by automaker Volkswagen.

London's FTSE 100 closed down 0.6 percent at 6,215.2 -- its lowest close since March -- while Paris' CAC slipped 0.55 percent to 5,643.96 and Germany's was down 0.76 percent at 7,451.68.

There were further losses in Asia where Tokyo's Nikkei shed 2.7 percent to slump to its lowest level since May despite strong results from electronics manufacturer Sony, which posted trebled first quarter profits.

South Korea's benchmark KOSPI was down 2.5 percent, Hong Kong fell 2.7 percent and Australia slipped 2.8 percent, while MSCI's index of Asia Pacific stocks excluding Japan fell 3.4 percent at the end of a week in which it had posted record highs.

Friday's volatility was triggered by Thursday's worldwide losses, culminating in the Dow Jones' second-biggest point loss of the year.

"Uncertainty is not what the market likes," said Todd Clark, director of stock trading at Nollenberger Capital Partners Inc. in San Francisco. "Sell first and find out later -- that's pretty much what happened today."

The 30-share Dow, which closed down 311.50 to 13,473.57, plunged nearly 450 points earlier in the session before moving off its lows and closing down about 2.3 percent. The Dow sank 416 points on Feb. 27 on worries about slowing global growth.

The S&P 500, down 35.43 to 1,482.66, tumbled 2.3 percent while the tech-laden Nasdaq was down 48.83 to 2,599.34, 1.8 percent.

The uncertainty that unnerved investors has come came mainly on two fronts: tougher time for the credit markets and another barrage of bad news for housing.

Tighter credit is troubling to investors for two reasons. Firstly, it threatens to slow the buyout boom that's helped prop up stock prices. Secondly, it could raise the cost of borrowing for companies, hurting corporate earnings.

To date, there have been roughly 20 buyout-related debt deals that have been postponed as credit markets have tightened.

"The loan market is in a deep correction and investors are forcing deals to be reconstructed," said Faris Kahn, editor at Reuters Loan Pricing Corp., which tracks debt and loan markets.

Credit market fears also sparked a selloff Tuesday, when the Dow sank 226 points. This week's declines come about a week after the Dow hit another record, closing above 14,000 for the first time last Thursday.

More disappointing news from the U.S. housing sector also has pressured stocks with homebuilders including D.R. Horton and Pulte Homes, the nation's No. 2 and No. 3 builders, posting huge losses.

A bigger-than-expected drop in new home sales in June has added to those woes as the Commerce Department reported new home sales tumbled 6.6 percent.

A jump in the price of oil above $77 a barrel helped spark the selloff, although crude prices finished lower, with U.S. light crude for September down 93 cents to $74.95 a barrel on the New York Mercantile Exchange.

"That was a big reversal, taking away one of the legs away from the stool of the selloff," said Clark.

While this week looks to be a big loser for the market, the outlook beyond that may not be so dreary.

Peter Cardillo, chief market economist for Avalon Partners, said Thursday's steep selloff was probably a blip in the latest leg of the bull market.

"I don't see it as an end to the bull market, but maybe the end of the bull run," he said. "I think that the market needs to reassess some of the euphoria that took place recently." E-mail to a friend

-- CNNMoney's David Ellis in New York contributed to this report.

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