British shares dropped sharply on Friday as global stock markets fell after weaker-than-expected US jobs figures and poor eurozone services data cast doubts over recovery in the world economy.
Official figures showed the US created only 115,000 jobs in April, well below expectations of 162,000. Photo: Tim Boyle/Bloomberg
4:09PM BST 04 May 2012
The FTSE 100 was down 1.95pc in the afternoon, while the FTSE 250 – viewed as a good indicator of the strenght of the UK economy – slid 2.9pc.
Chris Beauchamp of IG Index said there was nothing specific to point to, putting the fall down to “risk aversion”.
Earlier, markets in Europe had been unsettled when data showed the eurozone’s vast services sector shrivelled at a much faster rate in April than initially thought, suggesting that the bloc’s recession could extend through to mid-year.
Investors are also looking ahead to elections in France and Greece at the weekend. London markets will be closed on Monday for the bank holiday but European markets will be open.
The stock market falls accelerated after official figures showed the US created only 115,000 jobs in April, well below expectations of 162,000.
Adding to fears that the economic recovery has lost some momentum was a drop in the labour force of 342,000 as people abandoned their search for work, believing there were no positions available.
In the US, the Dow Jones was down 1pc, the broader S&P 500 lost 1.1pc andNasdaq Composite dropped 1.6pc. The S&P 500 suffered its first monthly decline of the year in April, and the benchmark index has struggled to convincingly pierce the key resistance level of 1,400.
On the continent Germany’s DAX fell 0.8pc and the CAC in France slid 1.86pc. Stocks in Spain and Italy were flat.
In London, the FTSE 100 was driven lower by mining stocks. The only risers were Royal Bank of Scotland, Lloyds Banking Group, Tesco, International Power and Weir Group in late afternoon trading. RBS was lifted by better-than-expected first quarter results.
Oil stocks were parly affected by a $3.20 fall in benchmark Brent crude prices to $112.84 a barrel after the disappointing US jobs figures.
Housebuilders and energy stocks were among the biggest fallers in the FTSE 250, with Essar Energy, Taylor Wimpey and Barratt Development dropping 8.5pc, 8.8pc and 7.7pc respectively.
Some in the market put the fall in builders down to a drop in house prices in April – the most in one-and-a-half years, according to the Halifax.
Graham Secker, equity strategist at Morgan Stanley, put the fall in the FTSE 250 down to “a general sell off of cyclical stocks”.
“The market probably got a bit too optimistic about an increase in growth, so investors are now reconsidering and closing long positions in cyclical shares,” he said.
Shares in Laird fall 7pc after the electronics company said the challenging environment it experienced in the second half of 2011 has continued in the first quarter of 2012.
While worries over the economic gloom hit recruiter Hays. Shares in the company fell 7.8pc.
- New Economic Data Will Guide the Dow (dailyfinance.com)