Wall St losses persist on recovery fears

Update (3pm): The Dow Jones dropped 35 points in early US trading on Wednesday after better-than-forcast employment figures had momentarily lifted investor sentiment.

The index opened marginally higher following publication of the private sector worker report but later fell 35 points lower at 11,831.

It followed a 2.2% decline on Wall Street on Tuesday, where the Dow shed almost 270 points to 11,866.

The sell-off continues despite a finalised deal to increase the US debt ceiling and decisions by Moody's and Fitch not to cut America's AAA rating.

Meanwhile, in London, the FTSE sunk deeper into negative territory amid fears over the US economy and escalating euro debt concerns.

London's leading index was almost 90 points lower at 5,629. It lost 1% on Tuesday.

The US economy is "balanced on the edge," said Harvard University professor Martin Feldstein, who sees a 50% chance of another recession, reported Bloomberg.

Meanwhile, the plight of European markets also came sharply back into focus, with Italy and Spain, two key members of the eurozone, suffering following the narrowly-averted US debt crisis.

Bond yields in both the founder members of the single currency hit monetary union records on Tuesday, forcing Spain's prime minister, José Luis Rodríguez Zapatero, to abandon his holiday plans.