Footsie loses ground as concerns over global recovery weigh on markets

FTSE: 5,131.10 (–74.75) Mid-250: 10,021.39 (–20.20) Small Cap: 2,925.60 (–11.82)RETURNING WORRIES about the global economic recovery wiped out gains on London's equities markets yesterday, as US employment data set off more alarm bells in dealing rooms.

The FTSE 100 fell 1.4 per cent in the wake of news out of Washington that jobless claims rose by more than expected, hurting some financial and resource stocks, the sectors most prone to suffer from risk-averse trading.

Man, a hedge fund, lost 4.6 per cent to 206.1p. BP was 3.3 per cent weaker at 386.1p.

The morning had been brighter when well-received earnings set an upbeat tone, setting the FTSE 100 on course for its fourth consecutive session of gains before the news from the US darkened the mood.

Premium drinks company Diageo made one of the strongest rises on the index after its annual earnings beat forecasts. Operating profit rose 5 per cent to £2.8 billion, with earnings per share up 16 per cent to 83.6p. It lifted its full-year dividend by 6 per cent to 40.4p. It became the latest company to say exposure to fast-growing emerging markets helped offset troubled conditions in Europe. Shares in the maker of Johnnie Walker whiskey and Tanqueray gin kept their gains in afternoon trade, rising 4.7 per cent to £11.70.

Kazakhmys, a ferroalloy producer, rose 5.2 per cent to 997p after it announced plans to buy back £250 million of its own London-listed stock.

Commodities trader Glencore eased 0.3 per cent to 388.5p after its maiden interim results as a public company met forecasts, rising 50 per cent to $3.3 billion. But the shares remained off their 530p price at the time of its flotation in May, after the volatile run in both commodities and equities markets on worries about the outlook for global growth buffeted the stock.

Near-term prospects remained dependent on the US, and the outcome of today’s meeting on the world’s central bankers at Jackson Hole, Wyoming.

“The market is awash with speculation and hope (as opposed to optimism) that Bernanke may announce or give an indication towards an impending form of quantitative easing to help stimulate the US economy and avoid it slipping back into recession, said Joshua Raymond, chief market strategist at City Index. – (Copyright The Financial Times Limited 2011)