Yields on safe-haven government bonds hit fresh record lows on Friday after a weak jobs report added to growing fears of a worldwide economic slowdown that on top of Spain's difficult finances sent investors scurrying for safety.
Wall Street opened lower and European shares extended losses after U.S. job growth in May was the weakest in a year and growth figures for the prior two months were revised lower, suggesting a faltering U.S. economic recovery.
Crude oil prices fell to a 16-month low below $98 per barrel as the weak U.S. jobs report added to heightened concerns about the global economy following poor manufacturing data from China and dismal European reports on factory activity.
A measure of European investor anxiety, the EuroStoxx 50 volatility index jumped 5.8 percent to 36.9, its highest level since December.
German Bund futures hit a record high of 146.89, up 86 ticks on the day, and yields on German 10-year bonds fell as low as 1.129 percent.
Benchmark 10-year Treasury notes rose as much as 1-4/32 in price to yield 1.442 percent, the lowest on records that date to the early 1800s, according to Reuters data.
"The hope for U.S. investors had been that the U.S. economy at least could continue its growth even as Europe was declining," said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.
"The time has probably come to for some new government action in the U.S., Europe and China."
The euro erased most of its losses against the U.S. dollar, rebounding from weakness sparked by the surprisingly weak U.S. jobs report.
The euro briefly turned positive and was trading slightly lower at $1.2350.
Brent crude oil futures tumbled to their lowest since February 2011 to an intraday low of $97.70, before recovering to around $98.60, off 3.2 percent for the session.
U.S. crude oil slipped to $82.37 per barrel, down 3.6 percent.
Gold prices reversed early losses to jump more than 1 percent, on fresh speculation U.S. authorities could unveil another round of monetary easing to boost growth.
Spot gold hit a high of $1,592.21 an ounce and was up 1.8 percent at $1,591.96.
The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, fell 1.3 percent after tumbling nearly 11 percent in May, the second-largest monthly decline since the darkest days of 2008.
Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video
© 2013 Thomson/Reuters. All rights reserved.