Footsie tumbles as poor US jobs data knocks sentiment

Equities worldwide tumbled after the closely-watched data came in worse than expected, with the Footsie closing down 85.18 points at 5126.

America's Dow Jones Industrial Average plunged following the news that US employers added just 431,000 jobs in May – boosted by one-off factors and short of market expectations.

American companies hired fewer workers in May than forecast and workers dropped out of the labour force, indicating government support is still needed to spur economic growth.

Private payrolls rose by 41,000, Labour Department figures showed, trailing the 180,000 gain forecast by economists. Including government workers, employment rose by 431,000, boosted by a jump in hiring of temporary census workers. The jobless rate fell to 9.7 per cent from 9.9 per cent.

The euro fell to a fresh four-year low against the US dollar as nervous investors piled out of riskier assets, with the single currency falling below the psychological 1.20 dollar level at one stage.

Euro weakness also saw the pound hit 1.21 euros – its highest level since November 2008 – before easing back slightly.

Among stocks, oil major BP's efforts to halt the Gulf of Mexico oil spill were also in the spotlight, but early gains were mostly wiped out by the sell-off.

BP shares were 4 per cent ahead at one stage but showed more modest advances of 1.1p to 433.4p later as chief executive Tony Hayward said it would take another 48 hours to judge the latest effort to resolve the crisis.

The BP boss gave few hints on the fate of the dividend, but added the oil major's strong balance sheet gave it flexibility in spite of a "severe" financial impact. Elsewhere insurer Prudential lost 91/2p to 556p in spite of gains earlier as the company indicated its failure to land bid target AIA would not cost the jobs of its top managers, including chief executive Tidjane Thiam.

But heavyweight mining stocks and banks also weighed on the index amid renewed concerns over the global recovery, while a 0.5 per cent fall in house prices in Britain during May also dented sentiment.

Royal Bank of Scotland was the leading blue-chip faller, losing 5 per cent or 21/2p to close the session at 431/2p.

With little corporate news, broker comment drove many share price

moves.

B&Q owner Kingfisher was 8p lower at 221.6p after gains on Thursday as brokers at Citigroup said the upside for the company looked limited after its cautious first-quarter trading update.

Fellow retailer Home Retail Group – the owner of Argos and Homebase – was also a prominent faller as Shore Capital analysts predicted a subdued trading update from the firm next week amid consumer uncertainty. Shares lost 8.4p to 242p.

Another retailer on the back foot was video games and consoles firm Game Group in the FTSE 250.

The shares were down 6.9p to 92.7p in spite of a broker upgrade as KBC Peel Hunt lifted its target price on the stock.

Elsewhere Corgi-to-Airfix model firm Hornby was off 5.8p to 127.5p after a 9 per cent fall in annual profits.

The biggest Footsie risers were Amec up 81/2p to 812p, Autonomy ahead 18p to 1799p, Icap up 2.7p to 394p and Vodafone ahead 0.9p at 138.7p.

The four biggest Footsie fallers of the session were Royal Bank of Scotland down 21/2p at 431/2p, Vedanta Resources off 120p at 2175p, Kazakhmys down 59p at 1119p and Segro off 131/2p at 2751/2p.