Markets Suffer Amid Weak Economic Data

Global stock and bond markets reflected investors' growing fears over a bailout in Spain, weak jobs data in the US and a slowdown in the Chinese economy.

German Bund yields plummeted to record lows as investors became increasingly more willing to accept a smaller return on what is considered a safe bet, while Spanish bonds remained above 6.5% raising questions about the country's ability to fund itself over the longer term.

:: The Spanish Crisis In Numbers

But treasury minister Cristobal Montoro tried to reassure markets that the country's 17 autonomous regions had balanced their budgets in the first quarter and are on track to meet their deficit targets for the year.

The announcement came just a week after Spain's wealthiest region Catalonia said it would need funding from the government.

Meanwhile US job growth was at its weakest level in a year, suggesting that the recovery in the world's biggest economy was faltering and sending stock markets lower.

Employers created just 69,000 jobs in May, compared to a prediction of 150,000, taking the unemployment rate to 8.2%.

Jane Foley from Rabobank told Sky News that the data could spur the Federal Reserve to act to stimulate growth with the country's deficit larger than the entire eurozone put together.

Joblessness in the eurozone also climbed to the highest level single the single-currency bloc was formed with 11% unemployment in March and April.

The world's second largest economy China had its worst PMI reading this year at 50.4 in May, while Germany's manufacturing sector shrank at the fastest rate in nearly three years.

Currency markets were also affected - on Friday the euro hit a two-year low against the dollar, while sterling fell to its lowest level in more than four months.