FTSE falls as U.S. data heightens recovery fears
Britain's top shares fell on Friday, led by banks and miners, after weak jobs data cast doubt over the sustainability of the economic recovery in the United States and sapped earlier momentum. Skip related content
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The FTSE 100 index closed down 33.39 points, or 0.6 percent, at 5,332.39, falling from a session high of 5,408.06.
The index again failed to finish above the psychologically important 5,400 level, which it has not managed since May 13.
U.S. employment fell for a second straight month in July as more temporary census jobs ended while private hiring rose less than expected, pointing to an anaemic economic recovery.
In addition, the U.S. government revised payrolls for May and June to show 97,000 fewer jobs than previously reported.
"Worries over the risk to the U.S. recovery have replaced European sovereign debt fears for the time being, and the uncertainty is weighing on equities," said Jimmy Yates, head of equities at CMC Markets.
"All eyes will now be on the U.S. Federal Reserve to see what measures, if any, it may take to maintain the economic recovery."
In London, banks, which led on the upside for much of the day after Royal Bank of Scotland's bullish results, were the sharpest fallers
RBS, 83 percent state-owned, reported lower impairment losses which helped its second quarter operating profit rise from the first quarter.
RBS's shares closed 1.7 percent lower, failing to hold on to early gains as investors lost their appetite for risk and banked profits.
Peer Lloyds Banking Group , which posted strong results on Wednesday, fell 3.0 percent, and HSBC shed 1.1 percent.
MINERS RETREAT
Miners also added their weight to the downside as investors sold out of riskier positions and sentiment turned negative.
Lonmin , the world's third-biggest platinum producer, was the top faller in the sector, down 5.2 percent. Analysts said a South African government ban on Lonmin's sales could be a serious threat to its business.
Among other blue chip fallers, household products firm Unilever shed 2.7 percent as both UBS and ING downgraded their ratings for the firm after it warned of a tough second half due to higher commodity cost and stiff competition after reporting higher second-quarter sales on Thursday.
Food producers and brewers fell as traders cited worries about the impact of soaring grain prices. AB Foods and SABMiller lost 1.5 and 2.4 percent, respectively, and Diageo was down 2.2 percent.
Insurers had mixed fortunes with Aviva , which posted results in the previous session, falling 3.2 percent and erasing most of Thursday's gains.
Old Mutual gained 0.7 percent after the Anglo-South African firm posted a better than expected 43 percent jump in half-year profit, helped by cost cuts.
The group also said it had sold its U.S. life insurer for $350 million to hedge fund Harbinger Capital.
Elsewhere on the upside, satellites operator Inmarsat was the top FTSE 100 riser, adding 4.0 percent after it reported above-forecast second-quarter results and a $1.2 billion satellite fleet order.
Oil major BP rose 0.5 percent. BP finished pumping cement into its ruptured oil well in the Gulf of Mexico on Thursday to seal off the source of the world's worst offshore spill.
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