Stocks in the United States tumbled on Friday, after computer maker Dell Inc warned that companies worldwide are reducing their spending on technology.
All three major indexes fell more than 1%. Shares of Dell, the world's second-largest computer maker, fell 13.8% to $US21.73. Earlier this week, the company reported a steep fall in quarterly profit. IBM shares dropped 2.3% to $US121.73.
Economic data added to the market's jitters ahead of the Labor Day weekend. A government report showed personal incomes fell unexpectedly in July and spending slowed as the effects of a government stimulus package wore off.
The Dow Jones industrial average was down 171.47 points, or 1.46%, at 11,543.71. Standard & Poor's 500 Index was down 17.93 points, or 1.38%, at 1,282.75. The Nasdaq Composite Index was down 44.12 points, or 1.83%, at 2,367.52.
The US bond market closed early on Friday ahead of the Labor Day holiday, contributing to thin trading volume.
Oil settled down 13 cents at $US115.46 per barrel as Hurricane Gustav approached the Gulf of Mexico. Earlier, oil had surged above $US118.
Trading volume was light on the New York Stock Exchange, with about 915 million shares changing hands - well below last year's estimated daily average of roughly 1.90 billion. About 1.56 billion shares were traded on the Nasdaq - also below last year's daily average of 2.17 billion.
European shares advance
European shares rose for the fourth consecutive day on Friday.
The FTSEurofirst 300 index of top European shares closed 0.3% higher at 1,194.73 points. The index is down 21% to date this year, due to bank writedowns, a slowing economy and uncertainty over interest rates.
Global equities rose sharply on Thursday after news that the US economy grew more than expected in the second quarter.
Data on Friday showed business activity in the US Midwest expanding at a far more robust rate than expected in August, and US consumer confidence rising to a five-month high.
But US personal income tumbled unexpectedly in July, registering its sharpest decline since a August 2005.
In the euro zone: inflation slowed more than expected in August and economic sentiment worsened more than forecast.
In Frankfurt, the DAX index ended at 6,422.3 points, up 1.76 or 0.03%. In Paris, the CAC-40 index closed at 4,482.6 points, up 21.11 or 0.47%. The Swiss market index closed at 7,238.74 points, up 48.34 or 0.67%.
In Britain, the FTSE 100 climbed 35.4 points, 0.6%, to 5,636.6. The index is down 12.7% for the year to date.
NZ market up
The New Zealand sharemarket closed up 28 points to 3353, on turnover of $78 million, on Friday.
New Zealand Oil & Gas was down 1 cent to $1.61 after announcing a profit of $97.2 million in the year to June.
Pike River Coal, in which NZOG has a third stake, rose 1c to $1.90, after announcing it lost $1.1m in the year to June.
Cavotech MSL was unchanged at $4.39 after posting a half year profit of $5.3m.
Telecom was up 4c to $3.30, while Fletcher Building went up 25c to $7.55.
Contact Energy was up 12c to $8.47 while Auckland International Airport rose 5c to $2.11. The Warehouse was up 8c to $3.40.
The Australian share market closed substantially stronger, driven by gains in the financial sector.
The 200 index was up 69.1 points, or 1.36%, to 5,135.6, while the broader All Ordinaries Index advanced 72.2 points, or 1.4%, to 5,215.5.
On the Sydney Futures Exchange at 1616 AEST, the September share price index contract was 85 points higher at 5,146 on volume of 21,936 contracts.
Macquarie Bank finished up $1.96, or 4.66%, at $A44.04. Westpac was up 41c, or 1.77%, to $23.55, National Australia Bank was up 50c, or 2.08%, to $A24.50, while ANZ lifted 41c, or 2.53%, to $A16.61.