Equities at 6-month lows on economic gloom
LONDON (Reuters) - British equities sank to six-month lows on Friday, with weaker-than-expected U.S. jobs numbers adding to a flurry of gloomy economic data and making investors even more reluctant to hold stocks over the long weekend.
Markets accelerated losses in afternoon trade on news that U.S. jobs growth was the weakest in a year in May, with the previous two months also revised down.
The FTSE 100 index .FTSE closed down 1.1 percent, or 60.67 points, at 5,260.19, having earlier fallen to a six month intra-day low of 5,229.76 and extending losses after a drop of 7.3 percent in May, its worst monthly showing in over three years.
"No one in the UK wants to go through their weekend long of anything," said James Ferguson, strategist at Westhouse Securities.
"Things are looking oversold but they are not looking oversold enough to pull in the speculative buyers ... To be oversold enough we would probably need to come down closer to the 5,100 (or) maybe 5,150 mark."
The London Stock Exchange will be closed for public holidays on Monday and Tuesday, with technical charts pointing to further weakness once markets reopen.
"The past week and a half the market has been digesting the prior slump. The congestion has taken the shape of a bear flag hence renewed downside pressure is to be seen soon. The break lower will likely see the market falling down to the 5,100-area before yet another corrective bounce to be seen," technical strategists at SEB said in a note.
One bright spot was heavyweight BP (BP.L), whose shares gained 1.
"Although ... a sale would be dilutive against nearly every financial metric and remove circa $3.5 billion of dividend driven cash flow, the disposal would see the removal of an interest that all too frequently has proven a source of considerable uncertainty and which investors, consequently, have in our view placed a significant discount upon," strategists at Deutsche Bank said in a note.
Industrial metals .FTNMX1750, autos .FTNMX3350 and luxury goods .FTNMX3760 were among those hit by prospects of weaker demand from the U.S. and China.
China's economy betrayed signs of a broadening slowdown as surveys of its vast factory sector showed momentum eased in May. The official purchasing managers' index - covering China's biggest, mainly state-backed firms - fell more than expected to post its weakest reading this year, while the HSBC China manufacturing PMI, tracking smaller private sector firms pointed to a seventh straight month of contraction.
"You keep thinking that all the news must be in the price, but we get a continued repeat every day of people moving into safe havens and selling risk assets," said Keith Wade, chief economist and strategist at Schroders.
One potential boost for risk assets could come from economy-boosting intervention by global central banks, with talk of such a possibility helping markets pare losses in late trade.
But Wade said any action was unlikely before the Greek elections on June 17, which may shed some light on the likelihood of Greece leaving the euro zone. ($1 = 78.4150 Japanese yen)
(Reporting by Toni Vorobyova; Editing by Toby Chopra)
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