Johannesburg — CONCERN about debt-plagued Mediterranean and Eastern European governments and rising unemployment data in the US caused global stocks and commodity prices to tumble yesterday, even after the European Central Bank (ECB) and Bank of England kept their main interest rates at record lows.

The negative sentiment washed over the local bourse. The JSE all share index slumped 2,26% to 26318, led by drops of 5,1% in gold and platinum stocks. The resources sector fell 4,4%.

The crisis over Greece's huge budget deficit and mounting fear that market contagion will spread to other countries with large deficits, such as Spain and Portugal, persisted yesterday.

ECB president Jean-Claude Trichet said the bank was confident that Greece was taking steps necessary to reduce its budget deficit.

The ECB kept rates at a record low of 1%.

Trichet said that many euro- zone countries would have sharply rising fiscal imbalances.

The Bank of England's monetary policy committee kept benchmark interest rates at a record low of 0,5% and decided not to expand the asset-buying programme for the first time since it began, last March, as part of fiscal stimulus to tackle the recession.

Data from the US showed first-time claims for unemployment benefits last week rose by 8000 to 48000. Analysts had expected claims to fall by 10000.

Stock markets in Greece, Portugal and Spain underperformed their European counterparts. Spain's Ibex 35 index fell as much as 4,8%, while Portugal's PSI 20 dropped 5,3%. Greece's benchmark ASE index lost 3,3%.

The FTSE 100 index of leading British shares slipped 2,1% while the CAC 40 index in France slid 2,3% lower.

The rand fell more than 1,9% to R7,65/ as the dollar strengthened against a weaker euro, which was in turn affected by euro-zone fiscal security concerns.

Wall Street fell at the opening -- the Dow Jones industrial average dropped 1,75% and Standard & Poor's 500 index lost as much as 1,9% by early last night. "The overall tone is set to remain cautious with various concerns still weighing on confidence," said Stuart Bennett, an analyst at Calyon Credit Agricole.

"Sovereign ratings, fiscal concerns remain high among these."

The gold price was up to 3,5% lower at 107,27 late yesterday afternoon.

The price of copper, aluminium, lead, zinc, silver and palladium also fell.

The Brent crude oil price was trading 2,9% lower at 73,80 a barrel last night after rising crude oil inventory in the US and the higher unemployment figures there dampened expectations for stronger demand.

"The market (in Johannesburg) was down for most of the day and it accelerated even further as jobless claims came out of the States this afternoon," said Ferdi Heyneke, a portfolio manager at Afrifocus Securities.

"The number was a concern for the market." With Reuters, Bloomberg