FTSE falls as U.S. payrolls miss expectations

By David Brett

LONDON (BestGrowthStock) – Britain’s top shares fell sharply on Friday as U.S. job data disappointed, adding to the downbeat sentiment after Europe’s debt worries resurfaced with the focus on French bank Societe Generale (SOGN.PA: ) and Hungary’s economy.

The FTSE 100 (.FTSE: ) ended down 85.18 points, or 1.6 percent, at 5,126.00, well off the week’s high of 5,262.50.

The U.S. non-farm payrolls rose just 431,000 in May compared to an estimate of 513,000, according to a Reuters poll. The figure was made worse after United States President Barack Obama had built up market hopes of a bumper figure on Wednesday.

Adding to the misery, U.S. private employers hired fewer workers than expected in May, a setback for the labor market recovery.

“Today’s jobs data is a blow to recovery enthusiasts, Joshua Raymond, market strategist at City Index said.

“Instead of looking at the biggest monthly jobs growth in the last 26 years, investors are now left questioning whether the labor market recovery is starting to slow down and how this could ultimately impact US growth.”

Those growth fears hit commodities and commodity-linked stocks, with metal prices down across the board as demand sentiment was dented.

Miners Lomin (LMI.L: ) and Vedanta (VED.L: ) were two of the biggest fallers in the sector, down 4 and 5.2 percent respectively.

Energy shares also retreated along with crude, which fell 2 percent. Royal Dutch Shell (RDSa.L: ) dropped 1.7 percent, while BG Group (BG.L: ) shed 1.0 percent.

BP (BP.L: ), however, held on to gains, up 0.3 percent, but well down from session highs.

Investors’ confidence in the company was boosted after it’s containment cap over the stricken Gulf of Mexico well began collecting about 1,000 barrels per day, and the company resisted political pressure to stop dividend payouts.

EURO DEBT FEARS

UK banks reversed earlier gains with traders concerned over French peer Societe Generale’s derivatives operations, although some traders said the speculation might be spurious.

A Societe Generale spokeswoman said the bank had nothing to say on the market talk.

Barclays (BARC.L: ), HSBC (HSBA.L: ), Standard Chartered (STAN.L: ), Royal Bank of Scotland (RBS.L: ) and Lloyds Banking Group (LLOY.L: ) shed 1.5 to 4.7 percent.

Investors’ anxiety increased after a spokesman for the Hungarian Prime Minister Viktor Orban supported the view that his country had only a slim chance of avoiding a Greek-style debt crisis.

The new government, which was sworn in less than a week ago, said it would soon announce an action plan to tackle the economy’s problems, after it publishes the figures about the “true” state of the 2010 budget this coming weekend or early next week.

Stock Market News

(Graphics by Scott Barber; Editing by Sharon Lindores)

FTSE falls as U.S. payrolls miss expectations