Investors recoiled from risky assets yesterday after a sharp drop in US employment for June set back hopes for a quick revival of the world's largest economy.

The data sank US and European equities, pressured commodity prices, while government bonds, the yen and the dollar were boosted by the rise in risk aversion. "If you were banking on the US driving a vigorous recovery, think again," said Alan Ruskin, strategist at RBS Securities. The larger-than-expected 467,000 decline in June payroll employment and the rise in the unemployment rate to 9.5 per cent from 9.4 per cent, poured cold water on hopes that the US was poised for recovery.