World stocks fell sharply Thursday on recession fears following further grim U.S. employment news and oil prices briefly dipping below $50 a barrel for the first time since early 2007.

The FTSE 100 index of leading British shares was down 106.41 points, or 2.7 percent, at 3,899.27, while Germany’s DAX was 146.88 points, or 3.4 percent, lower at 4,207.21. The CAC-40 in France was 133.53 points, or 4.3 percent, lower at 2,954.36.

The Dow Jones index of leading U.S. shares was on the retreat once again after the U.S. Labor Department reported that new applications for jobless benefits unexpectedly rose to a 16-year high of 542,000 last week from a downwardly revised figure of 515,000 in the previous week. Analysts had been expecting a modest decline to around 505,000.

The Dow was down 153.16 points, or 1.9 percent, at 7,844.12. That drop follows the 427 point slide Wednesday, which spooked investors across Asia, where stock markets also fell sharply.

“We’re scrabbling around trying to find the bottom but there are an increasing number who think we’re not far off it,” said Howard Wheeldon, senior strategist at BGC Partners.

Though stock investors have moved to price in recessions around the world in their valuations of companies, they remain wary of returning to the markets to buy up beaten down stocks, lest they fall victim to another bout of selling.

Investors are particularly concerned what would happen to the U.S. economy as a whole should any of the three Detroit automakers collapse if Congress fails to provide emergency funds.

As well as the uncertainty around individual companies, investors remain worried about broader economic news flow around the world.

So far, Japan, Hong Kong and European countries including Germany and Italy are officially in recession and most expect the U.S. and Britain to be joining them soon, whatever fiscal stimulus policy-makers come up with in the coming days and weeks.

“Assurances that policy makers will ‘take whatever steps (are) necessary to support the recovery’ _ per the minutes of the October Federal Open Market Committee _ no longer serve to assuage uncertainty as they once did,” said Neil Mellor, an analyst at Bank of New York Mellon.

Businesses have been quick to respond to the gloomy outlook by cutting jobs. Most notably, Citigroup said Monday that it is cutting 53,000 jobs around the world.

In Japan, Isuzu Motors Ltd. fell 17 percent after the truck maker said it will cut 1,400 contract workers as it scales back production for this fiscal year. Isuzu is the latest automaker to announce production cuts, joining domestic rivals such as Toyota Motor Corp. and Honda Motor Co.

In Britain, aircraft engine maker Rolls-Royce PLC said it plans to cut up to 2,000 jobs next year as demand for its products slumps amid the global economic downturn.

And pharmaceuticals company AstraZeneca PLC said it plans to close three plants in Spain, Belgium and Sweden and cut 1,400 jobs in Europe by 2013 to improve efficiency and expand investment in Asia to serve the growing market there.

Earlier, Tokyo’s benchmark Nikkei 225 average slid 570.18 points, or 6.9 percent, to 7,703.0 as figures showed exports in October sank 7.7 percent, the biggest decline since 2001, causing the country _ an export powerhouse _ to report a rare trade deficit.

Elsewhere in Asia, South Korea’s main index fell for its eighth straight session, losing 6.7 percent to 948.69, as the country’s currency, the won, fell to its lowest level in more than a decade. Hong Kong’s Hang Seng benchmark sank 517.24 points, or 4 percent, to 12,298.56.

In Australia, the main stock measure retreated 4.2 percent as weakening commodity prices dragged down the country’s natural-resource giants. BHP Billiton and Rio Tinto were both down 9 percent or more.

Compared to the rest of Asia, mainland China’s markets suffered modest losses, after speculation over a possible deal by Disney to build a long-awaited theme park in Shanghai boosted property shares. The benchmark Shanghai Composite Index fell 1.7 percent.

The gloomy global economic outlook has taken its toll on oil prices, which have fallen to their lowest in nearly two years. Light, sweet crude for December delivery was down $3.47 at $50.15 a barrel in early-afternoon London trade.

The dollar weakened 1.2 percent to 94.66 yen, while the euro edged up 0.4 percent to $1.2560.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.