Oil prices slump over recovery fears

OIL prices slumped to nearly $70 a barrel as Friday's downbeat jobs data from the United States raised fresh doubts about the sustainability of the global economic recovery.

The fall put pressure on Shell, which slipped 24p to 1,716p.

BP was also in the red, down 4p at 552.5p, after a Goldman Sachs broker downgrade from "buy" to "neutral" saw the oil giant lose earlier gains of almost 3 per cent.

The group had been enjoying much-needed gains after reporting some progress in its efforts to stem the Gulf of Mexico oil spill, although the Goldman blow saw the stock resume its downward descent.

BP said its latest attempt to control the leak captured 16,600 barrels of oil in its first three days of operation.

The update came as BP said the cost of clean-up and containment efforts has reached more than $1.6 billion (1.1bn) so far.

Meanwhile, oil and gas explorer Cairn Energy was down 3.7p at 392.9p, with Faroe Petroleum down 2.5p at 115p but Bowleven bucked the trend, up 0.25p at 118.5p.

The renewed double-dip recession fears meant mining stocks dominated the fallers board, with Kazakhmys off 45p at 1,074p and Xstrata down 32.2p to 919p.

Elsewhere, continued boardroom uncertainty cast a shadow over strong trading figures from insurer Prudential.

In an update ahead of its annual meeting, the Pru said growth accelerated in April and May and led to a 27 per cent rise in sales to 1.35bn for the first five months of the year.

Shares were 22p lower at 534p as investors continued to speculate about potential management changes following the group's failure to complete its multi-billion acquisition of AIG's AIA division.

More broadly, the hangover from Friday's disappointing US jobs figures sent Asian markets down almost 4 per cent and dragged the Footsie down from the start, alongside concerns over the Hungarian economy.

In London, the Footsie index recovered from its worst lows but finished 56.94 points off at 5,069.06 with a volatile start to trading in the US doing little for confidence late in the session.

Jimmy Yates, head of equities at CMC Markets, said: "The battle in investors' minds between promising corporate numbers and concerns over the fragility of global growth is being won by the macro-economic doubts at the moment."

Asian markets shuddered at the US jobs figures, with Japan's Nikkei 225 down almost 4 per cent and the Hang Seng off 2 per cent in Hong Kong.

The euro hit a new four-year low against the dollar over the weekend. It also lost further ground against the pound, which is trading at nearly 1.22 – its highest level since November 2008. Sterling traded at around 1.45 against the dollar.

Phil McHugh, senior executive dealer at Currencies Direct, said there was "little hope of a rebound for the euro".

He added: "The inception of the euro as a political vehicle has now been surpassed by hard economic realities. Whatever the future for the Eurozone, we can be sure that growth and confidence as a whole will suffer in the short term and this will play into a weaker euro."