Fear drives shares down and gold up

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Fear drives shares down and gold up

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The world’s financial markets continue to be volatile – Europe’s bourses were awash with red ink on Wednesday.

Investors sold shares on worries of weakness in the global economy, as well as the debt problems in the US and the euro zone.

Underscoring the troubles facing the US, growth for the services sector there unexpectedly fell in July.

The fear is that government spending cutbacks and declining manufacturing will prolong an economic slowdown and make Europe’s debt crisis worse.

In Frankfurt, Baader Bank trader Stefan Scharffetter said: “Debt crisis fears are taking over the markets. The US situation might have been shelved, but now we’re seeing the problems in Europe clearer again and we’re focusing on those, for example Italy and Spain where the yields are rising. And that is causing worries again.”

Oil prices tumbled, along with industrial metals such as copper, while demand for gold as a safe haven – from individual investors and various countries central banks – means that the price of the precious metal hit new record highs.