Global markets - US stocks fall as credit jitters remain

Federal Reserve efforts to loosen up tight lending markets did little to calm frayed investor nerves on Friday, as global stocks stayed on a downward track amid fears credit problems are deepening.

Equities declined from the start of the New York session on recession fears sparked by a U.S. Labor Department report showing the biggest drop in U.S. non-farm payrolls in nearly five years. The Fed move to inject $200 billion of cash into the banking system sparked a short-lived stock rally.

Gold erased initial gains to finish lower amid talk that cash-squeezed funds sold bullion for liquidity, capping a volatile week which saw gold made several runs toward $1,000 an ounce.

Oil in New York and London rallied to record highs, lifted by technical buying as the weak dollar kept funds flowing into inflation hedges like crude futures.

While Fed efforts to ease credit markets may succeed, the second consecutive monthly decline in payrolls suggested the U.S. central bank will have to continue to aggressively cut its benchmark interest rate to bolster the economy.

The jobs data, higher oil and credit crisis roiling the financial system all cast a long shadow on markets.