Asian markets tumble on growing global economy fears

Asian markets tanked Thursday after a below-par US jobs report compounded worries about the world's top economy, while the WTO fanned fresh trade war fears by allowing Washington to impose tariffs on the European Union.

Investors tracked yet another plunge in Europe and on Wall Street — where all three main indexes fell more than one percent for a second day — and shifted into safer assets such as gold which rose more than one percent.

On Wednesday data from payrolls firm ADP showed US companies added far fewer jobs than expected last month, while August's reading was also revised sharply lower. That followed news of the weakest US manufacturing conditions since 2009 at the height of the financial crisis.

The figures also come before the release of non-farm payrolls data Friday that are closely watched for a gauge on the health of the economy, with observers now fretting that a slowdown across the world could now be biting in the United States.

New York traders rushed for the exit, as did their European counterparts who were also hammered by fears Britain will leave the EU without a divorce deal as well as increasingly bleak economic data in the region.

"The market was still digesting the weaker (factory) data and the implication for global growth then got whacked with the slide on the ADP data compounded by a catastrophic decline in US auto sales, which now raises more questions than answers about the resilience of the US consumer," said Stephen Innes, Asia-Pacific market strategist at AxiTrader.

Hopes for a China-US trade breakthrough "could keep the risk-on light flickering, but the dreary economic data does perhaps suggest that traders could be better sellers in this risk-toxic environment", he added.

Just as Washington and Beijing prepare for high-level trade talks this month, the World Trade Organization provided markets with a fresh headache by ruling that the EU had given illegal support to plane-maker Airbus, allowing the US to impose billions in tariffs on the bloc.

Washington later announced a series of levies starting on October 18.

However, the WTO is due to rule in the next six months on whether to allow the EU to impose its own huge tariffs the other way over US subsidies to Boeing, raising the possibility of another bruising trade war between the US and a key trade ally.

Asian equity markets were all deep in the red. Tokyo went into the break two percent lower while Sydney shed more than two percent, Wellington lost 1.3 percent and Hong Kong lost 0.7 percent.

Singapore and Taipei shed 0.8 percent each, while Manila and Jakarta were both off 0.9 percent.

The weak US data has ramped up the possibility the Federal Reserve will cut interest rates for a third time this month, weighing on the dollar against most currencies including higher-yielding, riskier units.

It held its ground against the pound after Prime Minister Boris Johnson published his "final" Brexit proposals and warned the EU that Britain would leave without a deal on October 31 if the bloc did not accept them.

Brussels reacted coolly to the proposal, raising the likelihood of a messy divorce just as the British economy comes under strain.

Oil prices edged up but were unable to recover Wednesday's heavy losses caused by worries about the effects on demand from the stuttering global economy.

Both main contracts are now below their levels before last month's rocket attack on Saudi crude facilities that wiped out five percent of world supplies and sent prices soaring.