Bloomberg News

U.K. Stocks Drop After U.S. Jobs Report Misses Estimates

April 10, 2012

U.K. stocks fell to the lowest level this year after a U.S. report showed employers added fewer jobs than forecast in the world’s largest economy last month.

HSBC Holdings Plc (HSBA) and Rio Tinto Group led declines on the benchmark FTSE 100 (UKX) Index. Randgold Resources Ltd. (RRS) rallied the most since November after Mali’s military junta agreed to hand over power in the country that accounts for about two-thirds of the miner’s gold output.

The FTSE 100 dropped 128.12, or 2.2 percent, to 5,595.55 at the 4:30 p.m. close in London, the lowest since Dec. 30, paring this year’s gain to 0.4 percent. The gauge slid 0.8 percent last week as British manufacturing output unexpectedly contracted and concern about the euro-area debt crisis resurfaced. The FTSE All-Share Index fell 2.2 percent today and Ireland’s ISEQ Index lost 1.5 percent.

“Markets in Europe got their first chance to react to Friday’s non-farm payroll figures this morning, and the result was not pretty,” Chris Beauchamp, a market analyst at IG Index in London, wrote in e-mailed comments.

The U.S. Labor Department said April 6 that employers added 120,000 jobs in March. That was the fewest in five months and less than the median economist forecast of 205,000 in a Bloomberg survey. The amount had exceeded 200,000 for three straight months.

Fed Stimulus

The weaker-than-expected payroll report won’t be enough to propel the Federal Reserve to commit more monetary stimulus to revive the economy, according to Stewart Richardson at RMG Wealth Management LLP.

“We now know that there will not be any new money printing and the rally in European equities appears to be over,” said Richardson, the chief investment officer at RMG in London. “Without any more spiking of the punch bowl, equity investors are beginning to leave the party.”

HSBC, Europe’s largest bank, slipped 3.2 percent to 537 pence. Rio Tinto, the world’s third-biggest mining company, declined 4.5 percent to 3,306 pence. Banks and basic-resources companies were among the largest fallers today.

FirstGroup Plc (FGP) slid 7.2 percent to 198.5 pence as brokers from Barclays Plc to Citigroup Inc. downgraded the British transport operator.

Randgold Rallies

Randgold soared 5.2 percent to 5,425 pence, the biggest gain since November.

Mali’s military junta agreed to hand over power to a temporary government that will organize elections, increasing the prospects that sanctions imposed since the coup will be removed. Soldiers unhappy with a lack of resources to combat Touareg rebels overthrew President Amadou Toure’s government on March 22.

Cove Energy Plc (COV) gained 4.2 percent to 219 pence after Mozambique clarified a tax charge.

Thomas Cook Group Plc (TCG) rallied 13 percent to 23.25 pence, the biggest jump since February, after the travel company said it’s in advanced talks with its banks on extending its financing arrangements.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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