LONDON (AP) — Financial markets around the world were roiled Thursday after Japanese stocks suffered their biggest slide since the country was hit by a devastating tsunami more than two years ago. Several reasons have been blamed for the 7.3 percent, or 1,143 points, fall in the Nikkei index to 14,483.98, including a spike in the Japanese government's borrowing costs and unexpectedly weak Chinese manufacturing figures. [...] the turn in sentiment in financial markets had its roots in the U.S. on Wednesday and the mixed messages from the U.S. Federal Reserve about when it might start scaling back its bond-buying program. While the written testimony to lawmakers from Fed chairman Ben Bernanke appeared to signal that the central bank wasn't ready to change its policy of flooding the economy with money by buying up bonds from banks, subsequent remarks — and the minutes of the Fed's last rate-setting meeting — triggered speculation that a change is afoot. Others say financial markets need to get over their addiction to stimulus and the ending of these emergency central bank policies will be a clear signal that the global economy is healing well from the financial crisis and the deepest recession since World War II. The sell-off is a reminder of Japan's vulnerability as Prime Minister Shinzo Abe tries to end two decades of stagnation with unprecedented monetary easing, increased government spending and reforms to make the world's No. 3 economy more competitive. [...] because it is mostly owned by domestic investors, especially huge banks and insurance companies, the country's credit rating has remained steady. Oil prices were under the kosh too amid concerns over the global growth environment — the benchmark New York rate was down $1.93 at $92.35 a barrel.

"The underlying story in jobless claims continues to be one of gradual improvement," Bricklin Dwyer, an economist at BNP Paribas, wrote in a research report. The decline in claims has coincided with steady job growth over the past six months. Since November, employers have added an average 208,000 jobs a month. Federal Reserve Chairman Ben Bernanke told a congressional committee Wednesday that the job market is improving, but that higher taxes and government spending cuts likely will slow economic growth this year.

Prices surged on congressional testimony by Fed Chairman Ben Bernanke early in the day that suggested the central bank would not slow its massive economic stimulus program any time soon. [...] minutes of a Fed meeting were released suggesting the stimulus could be scaled back as early as next month if the economy picks up, and stocks began dropping fast. "If you had any doubts about the influence of the Fed, you only have to look at the roller coaster that followed Bernanke's testimony this morning and the release of Fed minutes this afternoon," said David Kelly, chief global strategist at J.P. Morgan Funds. Aside from the Fed's stimulus, other factors have been pushing the stock market higher, including a rebounding housing market, a pickup in hiring and strong earnings at big U.S. companies. Investors don't like when the Fed pulls back from stimulus policies and raises interest rates because it typically has slowed the economy, and even led to recessions. [...] JPMorgan's Kelly notes that when interest rates are very low, as they are now, history suggests interest rate hikes won't hurt the stock market that much because it means the economy is getting stronger.

European officials say tax fraud and evasion costs the 27-nation bloc's governments an estimated 1 trillion euros ($1.3 trillion) a year at a time when much of the region is in recession and governments are forced to tighten their budgets. [...] the two governments gave in Wednesday after making sure the system's introduction would be delayed until the end of the year to grant more time for negotiations on abandoning bank secrecy with non-EU countries such as Switzerland, Monaco and Liechtenstein. The leaders didn't give an exact starting time for the automatic information exchange, but cheered the political agreement. In the meeting's concluding statement, the EU called for rapid progress on the measures against "aggressive tax planning and profit shifting" and vowed to push ahead with closing legal loopholes. On Tuesday, members of a U.S. Senate subcommittee grilled Apple CEO Tim Cook over allegations that the company's Irish subsidiaries help it avoid billions in U.S. taxes.

External factors such as Europe's recession, which is damaging markets for exports from New England businesses, and federal spending cuts, which are reducing sales by the region's defense contractors, are crimping the region's economy, according to the New England Economic Partnership. Economists blamed slower growth in Maine in education and health services, professional and business services, construction and manufacturing. The return of the jobs market has helped boost household income and a rebounding stock market has strengthened household wealth, Clayton-Matthews said. [...] demand would be stronger without automatic federal spending cuts that took effect in March and the end to a temporary payroll tax cut, he said. The recovery in Vermont's economy in the next five years is expected to be fueled by businesses in the state taking advantage of a stronger global economy, a return to "more normally functioning financial markets" and improving residential and second-home markets.