Rio Tinto and Fresnillo lead retreat as US jobs report fuels global concerns

FTSE:5,855.01 (-17.09) Mid-250:11,972.66 (+9.63) Small Cap:3,287.09 (+6.83)

UK STOCKS closed little changed as US payrolls data that missed forecasts fuelled concern that the global economic recovery is faltering, offsetting a European Union agreement on further assistance for Greece.

Rio Tinto and Fresnillo led a retreat among mining companies. Go-Ahead and Stagecoach advanced after JPMorgan Chase advised buying shares of the biggest bus operators.

The benchmark FTSE 100 Index added 0.1 per cent to 5,855.01 at the close in London, paring this week’s decline. The FTSE All-Share Index also advanced 0.1 per cent and Ireland’s ISEQ Index fell 0.8 per cent. The FTSE 100 has fallen 1.4 per cent this week, its biggest drop in a month, as reports on US employment and factory orders trailed economists’ forecasts and a gauge of Chinese manufacturing expanded at the slowest pace in nine months.

“We feel that the slowdown which we now see is potentially becoming worse than economists have forecast,” Michael Preiss, the chief equity strategist at Standard Chartered Bank said in a Bloomberg Television interview. “Investors need to reposition their portfolios into lower beta stocks, maybe higher quality, and get into some more defensive sectors like health care, materials and telecoms.”

Preiss said he has cut his 12-month outlook on global equities to “neutral” from “overweight”.

UK stocks fell after US payrolls data then recouped losses through the close of trading. US employers in May added the fewest number of workers in eight months and unemployment unexpectedly rose to 9.1 per cent, underscoring Federal Reserve concerns the expansion is failing to boost the labour market. Payrolls increased by a less-than-projected 54,000 last month, after a revised 232,000 gain in April that was smaller than initially estimated, Labor Department figures showed.

Rio Tinto lost 0.8 per cent to 4,107.5 pence. Fresnillo retreated 1.7 per cent to 1,404 pence. Intermediate Capital Intermediate Capital lost 6.2 per cent to 323.6 pence as Credit Suisse Group cut its price estimate to 380 pence from 390 pence and.

Go-Ahead advanced 2 per cent to 1,490 pence and Stagecoach rallied 3.8 per cent to 249.1 as JPMorgan rated the shares "overweight" in new coverage. – (Bloomberg)