London close: Markets hammered by fears over US labour market

5th Apr 2013 17:03

A lacklustre US employment report resulted in a market sell-off across global indices on Friday afternoon as the American economy added much fewer jobs than expected in March.Market Analyst Craig Erlam from Alpari said that the optimism surrounding the US recovery "has been shattered in the space of a week". "A long list of disappointing figures ranging from manufacturing and services PMIs to ADP employment figures and jobless claims left people quite pessimistic leading up to today's jobs report. But even all of that wasn't enough to prepare us for a truly woeful non-farm payrolls figure for March," Erlam said.Meanwhile, reports of a new bird flu virus in China hammered stocks in the travel and leisure sector, providing an extra drag on sentiment early on.Non-farm payrolls point to subdued labour marketUS non-farm payrolls increased by just 88,000 in March, the lowest rise in nine months, according to the Labor Department this afternoon. This was well under the 190,000 consensus estimate.The jobless rate dropped from 7.7% to 7.6%, but this was the result of the labour force shrinking by nearly half a million people.While the news increased the likelihood that the Federal Reserve would hold off on scaling back its quantitative easing programme anytime soon, the FTSE 100 reacted with a 1.5% fall on Friday following a weak start on Wall Street."Market bulls on both sides of the Pond may be tempted to take risk off the table and enjoy the weekend, given the apparent dependence on positive US data for market strength in the last few weeks," said Nick Dale-Lace, a Senior Sales Trader at CMC Markets.Travel stocks drop on avian flu fearsAirline peers easyJet and IAG and travel operators TUI Travel and Thomas Cook were registering sharp falls today as fears were raised that a bird flu outbreak in China would stifle air travel demand. Shares in Chinese airlines declined the most in nearly four years following news six people died of the H7N9 bird flu virus.Budget airline easyJet was shrugging off an upgrade by Investec from 'hold' to 'buy' after a seemingly in-line trading update this morning.High Street giant Next was a heavy faller after Credit Suisse downgraded its rating on the stock from 'outperform' to 'neutral', after a 50% jump in the share price in the last year. The broker said that some of the 2013/2014 drivers are "not quite as significant as hoped".Telecoms firm BT Group was also suffering the effects of a downgrade by Morgan Stanley to 'equal weight'.Utility stocks Centrica, SSE and National Grid were making gains this afternoon after the US data as traders sought out relatively 'safer' assets in the broader market sell-off.AstraZeneca was flat despite unveiling positive results from a study of fostamatinib, an oral drug being developed for the treatment of rheumatoid arthritis.Gold miner Centamin surged as gold prices bounced back after their recent falls and a director acquired a further stake in the company. Precious metals groups Randgold and Fresnillo were also tracking the price of the dollar-denominated yellow metal higher, as the disappointing US jobs figures increased hopes that the Fed would stick to its stimulus programme. This would in turn make the greenback weaker and gold more attractive.FTSE 100 - RisersEurasian Natural Resources Corp. (ENRC) 243.10p +3.36%Randgold Resources Ltd. (RRS) 5,290.00p +2.52%Fresnillo (FRES) 1,309.00p +1.71%BAE Systems (BA.) 386.30p +0.89%Carnival (CCL) 2,217.00p +0.73%Centrica (CNA) 374.10p +0.70%Aviva (AV.) 295.70p +0.51%National Grid (NG.) 781.00p +0.45%RSA Insurance Group (RSA) 109.60p +0.27%SSE (SSE) 1,509.00p +0.07%FTSE 100 - FallersInternational Consolidated Airlines Group SA (CDI) (IAG) 234.90p -6.90%easyJet (EZJ) 1,027.00p -6.38%TUI Travel (TT.) 298.60p -4.66%Amec (AMEC) 1,052.00p -4.19%Aberdeen Asset Management (ADN) 397.10p -3.76%Wolseley (WOS) 3,040.00p -3.71%InterContinental Hotels Group (IHG) 1,913.00p -3.63%Next (NXT) 4,170.00p -3.58%Petrofac Ltd. (PFC) 1,384.00p -3.35%Standard Life (SL.) 326.10p -3.23%FTSE 250 - RisersCentamin (DI) (CEY) 45.95p +9.54%NMC Health (NMC) 327.70p +6.12%African Barrick Gold (ABG) 190.20p +3.71%Daejan Holdings (DJAN) 3,532.00p +3.27%Ocado Group (OCDO) 143.00p +2.51%Kenmare Resources (KMR) 27.30p +2.25%Barr (A.G.) (BAG) 547.00p +2.24%New World Resources A Shares (NWR) 216.00p +1.41%Fidessa Group (FDSA) 1,870.00p +1.35%Dialight (DIA) 1,276.00p +1.27%FTSE 250 - FallersThomas Cook Group (TCG) 105.80p -6.95%Ladbrokes (LAD) 207.50p -6.95%Petra Diamonds Ltd.(DI) (PDL) 113.00p -6.92%International Personal Finance (IPF) 422.00p -6.22%Genus (GNS) 1,421.00p -6.14%Bodycote (BOY) 504.00p -5.97%Homeserve (HSV) 185.60p -5.83%Pace (PIC) 230.70p -5.72%National Express Group (NEX) 192.10p -5.65%Tullett Prebon (TLPR) 251.60p -5.34%BC