London shares decline due to weak US data with banks and miners hit worst
WEAK US data intensified anxiety about economic recovery and dragged Britain’s top share index to a lower close yesterday, with risk-sensitive banks and commodity stocks hit hardest.
The FTSE 100 ended 42.23 points or 0.8 per cent lower at 5,211.29. It closed down 0.3 per cent on Wednesday, snapping a six-day winning streak.
Producer prices in the United States fell for a third month, the Philadelphia Federal Reserve Bank said factory activity in the US Mid-Atlantic region fell unexpectedly and New York manufacturing hit its lowest level since December 2009.
Investors were unimpressed by quarterly results from JPMorgan Chase & Co, which topped estimates but with much of the gains coming in areas that will not be a stable future source of income.
Banks which are closely geared to the overall health of the economy were among the heaviest fallers on the index with Barclays the standout loser, down 4.2 per cent.
“Economic data is being watched much more than good earnings numbers and it seems as
if people were already anticipating good news,” said Nick Serff, market analyst at City Index.
He said there was not much significant technical support above the psychological 5,000 level and that the lows just beneath 4,800 touched at the start of July would be watched.
Mining stocks, already pressured by data from China that showed a slowdown in economic growth in the second quarter, fell further as the US data implied anaemic demand from the world’s largest economy.
Eurasian Natural Resources fared the worst of the these stocks, shedding 3.5 per cent.