U.S. jobs data takes FTSE lower

By Atul Prakash and Dominic Lau

LONDON (Reuters) - The blue chip index ended nearly 1.5 percent weaker on Friday, led lower by banks, as unemployment data underlined worries about the U.S. economy and pressured global stock markets.

The FTSE 100 .FTSE benchmark lost 88.5 points to close the week at 5,906.8, well off an intraday high of 6,074.5, but still outperforming major European peers due to robust oil and mining stocks.

The index slipped 2 percent during the week and suffered its third successive week of losses. It is now down more than 8 percent this year.

Stocks fell sharply after data showed the U.S. unemployment rate rose to 5.5 percent last month from 5 percent, its highest level since October 2004. Some 49,000 jobs were cut from payrolls in May, up from a revised 28,000 that were lost in April, the Labour Department said.

The data surprised investors, giving them second thoughts about the health of the U.S. economy after recent figures suggested a recession had been averted.

"The U.S. payrolls figures were much in line with expectations, but the surprise was the big jump in the unemployment rate," said Chris Iggo, a strategist at Axa Investment managers.

"I don't think there is much upside for the UK equity market in this environment. The domestic economy is clearly very weak and the consumer and housing markets are facing a lot of headwinds. Overall, the market would probably trade lower in the next couple of months."

Banks, pharmaceuticals and travel stocks lost heavily, while oil, mining and telecom shares were top gainers.