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US job fears wipe 25bn off FTSE as stock markets across the world reel from grim outlookThe number of Americans in work rose less than expected Stock markets on both sides of the Atlantic slammed into reverse
01:17 GMT, 6 April 2013
01:17 GMT, 6 April 2013
Nearly 25billion was wiped off the value of Britain’s top companies yesterday as bleak jobs news in the US sent stock markets tumbling.
The number of Americans in work rose by 88,000 in March – well below the 200,000 expected by analysts.
Stock markets on both sides of the Atlantic slammed into reverse with the FTSE 100 index down 94.34 points in London to a two-month low of 6249.78.
The sell-off took losses over the last three days to 240 points or 61billion – although the FTSE 100 is still six per cent up this year.
Nearly 25billion was wiped off the value of Britains top companies yesterday as bleak jobs news in the US sent stock markets tumbling
Marcus Bullus, trading director at City stockbroker MB Capital, said the US jobs figures were ‘a major blow to not just the US but the global economy’.
He said: ‘Jobs are still being added but the US economy just hit a major speed bump. We’re back on red alert.’ Unemployment in the US fell from 7.7 per cent to 7.6 per cent in March – below the 7.8 per cent rate seen in Britain and 12 per cent in the eurozone.
But the increase in employment was half the average level of the past six months and well below the 268,000 jobs created in February.
Shares on Wall Street also fell with the Dow Jones Industrial Average down more than 100 points when the London stock market closed.
David Madden, a market analyst at City trading firm IG, said: ‘The FTSE is at a two-month low. The jobs report from the US highlighted how fragile the US employment market is.
Marcus Bullus, trading director at City stockbroker MB Capital, said the US jobs figures were a major blow to not just the US but the global economy
This understandably spooked traders, even though the unemployment rate actually fell to 7.6 per cent.
‘Equity markets are still well up since the start of the year, but the reaction to the US data shows us how quickly traders will take their money off the table.’
Elsewhere, George Osborne received an unexpected boost last night after he was told Britain’s credit rating is safe – for now.
International agency Standard & Poor’s said the UK will keep its AAA status thanks in part to the Chancellor’s commitment to cut the record deficit racked up by Labour.
But it added there was ‘at least a one-in-three chance’ that it will cut the rating in the next two years, particularly if the Government waters down its austerity drive.
The ruling will come as a relief to the Treasury after rival ratings agency Moody’s stripped Britain of its AAA status earlier this year.
Fitch, the third major international ratings agency, last month said there was a ‘heightened probability’ that it will strip the UK of its AAA status by the end of April.