San Francisco Frontiers - Markets pressured as recession talk builds

London stocks advanced 0.7 percent toward midday, with energy major Shell jumping two percent on a forecast of rebounding first-quarter gas production.

Frankfurt and Paris logged modest gains in afternoon eurozone trade, with many investors away for an extended break.

All three major European markets will be shut on Friday and Monday for a four-day Easter holiday weekend.

"Growing recessionary concerns cast a pall over markets," said analyst Richard Hunter at trading firm Interactive investor.

"A number of US releases suggested that the economy is beginning to wilt under the pressure of the Federal Reserve's aggressive [interest rate] hiking policy, with attention now turning to the scale of a recession, rather than whether one will happen."

Focus now turns to the release of key US non-farm payroll figures on Friday, which will provide the latest snapshot of the world's biggest economy.

The data could be crucial to determine the Fed's next interest rate decision, though US markets will be closed for Easter.

"The closure... on Friday means that equity traders will be unable to react to the release until next week which, coupled with the long weekend, has seen some traders squaring positions and being unwilling to open new ones given the extended break," Hunter added.

Asian indices diverged with activity winding down ahead of the Easter break.

After a few weeks of gains fuelled by hopes the Fed would soon take its foot off the pedal in tightening monetary policy, data this week has fanned talk that its year-long hiking campaign may have gone too far.

On Wednesday, a report from the Institute for Supply Management showed the US services sector grew less than forecast last month, while another pointed to private employers slowing their hiring pace in March.

The readings came a day after news that job openings had fallen to their lowest level since May 2021.

While traders have long hoped for a tightening of the labour market and an economic slowdown that would allow the Fed to stop lifting rates, there is now a rising concern of a deep recession.

Adding to the unease is ongoing uncertainty about the banking sector after last month's turmoil that saw three US regional banks go under and Credit Suisse taken over.

The upheaval was largely blamed on the sharp pace of rate hikes over the past year.

The prospect of a recession weighed on US markets, with the S&P 500 and Nasdaq in the red, while traders also shifted into safe-haven Treasury bonds.

In Asia on Thursday, Tokyo stocks slid on a strengthening yen and Shanghai turned flat, while Hong Kong climbed after a private survey of Chinese services activity rose by more than expected.

- Key figures around 1045 GMT -

London - FTSE 100: UP 0.7 percent at 7,716.34 points

Paris - CAC 40: UP 0.1 percent at 7,326.50

Frankfurt - DAX: UP 0.3 percent at 15,567.94

EURO STOXX 50: UP 0.2 percent at 4,306.41

Tokyo - Nikkei 225: DOWN 1.2 percent at 27,472.63 (close)

Hong Kong - Hang Seng Index: UP 0.3 percent at 20,331.20 (close)

Shanghai - Composite: FLAT at 3,312.63 (close)

New York - Dow: UP 0.2 percent at 33,482.72 (close)

Euro/dollar: DOWN at $1.0898 from $1.0904 on Wednesday

Pound/dollar: UP at $1.2466 from $1.2462

Euro/pound: DOWN at 87.42 pence at 87.50 pence

Dollar/yen: DOWN at 131.22 yen from 131.32 yen

Brent North Sea crude: DOWN 0.2 percent at $84.84 per barrel

West Texas Intermediate: DOWN 0.2 percent at $80.42 per barrel

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A.Smith--SFF