Markets: US jobs data fuels downbeat mood

Published on Tuesday 31 May 2011 20:22

LONDON FTSE 100 CLOSE 5,928.61 -61.38

DISAPPOINTING manufacturing figures on both sides of the Atlantic dragged the Footsie down yesterday, obliterating the positive start to the week.

The FTSE 100 index closed 61.38 points or 1 per cent lower at 5,928.61, having touched 5,995.22 in morning trading.

But weak economic and employment figures from the United States slashed 100 points off Wall Street's Dow Jones index in early trading, pushing London into an afternoon slide.

Private employers in the United States added just 38,000 jobs in May, down from 177,000 in April, according to payroll processor ADP.

Will Hedden, sales trader at IG Index, said: "After Tuesday's strong performance as the Greek debt situation edged to some sort of resolution, traders were looking for an excuse to exit positions - and that came with US jobs data."

The Footsie had already been weighed down by the UK purchasing managers' index, which showed a further slowdown in manufacturing activity in May to hit a 20-month low. This affected the pound, which was down at $1.63 against the dollar and €1.13 against the euro.

The top flight was also weakened by a number of companies going ex-dividend, meaning buyers won't be entitled to the latest shareholder payout.

Those fallers included Vodafone, which dropped 7.4p to 161.6p, while Marks & Spencer was down 12.5p to 386.4p, a decline of 3 per cent.

On a brighter note, Glasgow-based temporary power supplier Aggreko ended the day 15p higher at 1,882p after analysts at Canaccord Adams upped their recommendation from "hold" to "buy" and also raised their target price from 1,500p to 2,200p.

Canaccord said the upgrade followed an "upbeat" presentation at its offices on Friday from Aggreko chief executive Rupert Soames and finance director Angus Cockburn.

Shares in J Smart, the Edinburgh-based property developer, fell 15p to 420p after its first-quarter trading update revealed that writedowns on the value of its portfolio would dent profits.

3D Diagnostic Imaging jumped 10 per cent or 0.25p to 2.75p after the Dundee-based dental tools maker said it would disband its US sales force and instead outsource the work, saving it 500,000 each year.

Website hosting firm Iomart climbed 2.8 per cent or 2.38p to 88.5p after the Glasgow firm's push into "cloud computing" led to a 600 per cent leap in full-year pre-tax profits to 2.8m.

Sentiment towards fashion label Burberry remained strong in the wake of its recent full-year results, which showed a 39 per cent increase in underlying pre-tax profits to 298 million. Shares were 7p higher at 1,326p.

Other risers included security services group G4S, which topped the risers' board, after a broker upgrade lifted shares 5.1p to 291p.

Miners were lifted by the affect of a weaker dollar on commodity prices. Those on the way up included Rio Tinto, which lifted 10p to 4,255p, while Fresnillo added 20p to 1,478p.

Outside the top flight, Tate & Lyle rose 5 per cent as analysts continued to applaud last week's figures from the sweetener group showing underlying full-year profits rose by 34 per cent. Shares were up 31p to 651.5p.