October 5, 2018 / 8:40 AM / a month ago

British stocks posts biggest weekly drop in six months on strong U.S. jobs report

LONDON (Reuters) - Britain’s top stock index fell more than 1 percent on Friday, posting its biggest weekly drop in six months, as a strong U.S. jobs report raised concerns of a widening selloff in global markets.

FILE PHOTO: Traders looks at financial information on computer screens on the IG Index trading floor in London, Britain February 6, 2018. REUTERS/Simon Dawson

The export-oriented FTSE 100 index .FTSE, down 1.3 percent, was hurt also by a stronger pound. The British currency rallied by a quarter of a percent after European Union Brexit negotiators said that a divorce deal with Britain was very close.

Strong U.S. data and confident remarks by U.S. policymakers had fuelled a surge in U.S. Treasury yields which had spilled over into broader global stock markets as investors worried that policymakers may tighten policy more than expected.

“It is a strong jobs report, make no mistake,” said Kenneth Broux, an FX strategist at Societe Generale in London. An unemployment rate of 3.7 percent was what the Fed had forecasted for the fourth quarter but we have got there sooner.”

U.S. job growth slowed in September as Hurricane Florence depressed restaurant and retail payrolls, but the unemployment rate fell to near 49-year lows of 3.7 percent, indicating more tightening in labour market conditions.

The main index closed down 1.3 percent at 7,318 points and is has fallen 2.5 percent on the week, its biggest weekly fall since the week of March. 21.

The sell-off in U.S. Treasuries - 10-year bond yields are up 15 basis points this week and set for the biggest weekly rise in eight months — rippled into bond markets in Europe and Britain and pushed stock markets around the world lower.

Among major stock news, Unilever’s decision (ULVR.L), (UNc.AS) to scrap plans to move its headquarters to the Netherlands on Friday in the face of a British shareholder revolt sent the stock down more than half a percent.

Shares in Intu Properties (INTUP.L) soared more than 27 percent after a consortium, including British billionaire John Whittaker and Canada’s Brookfield Asset Management (BAMa.TO), said it was considering a bid for the shopping centre owner.

Miners were the main drags on the index with Anglo American (AAL.L) and Rio Tinto (RIO.L) leading losses.

The mid-cap index .FTMC was down 0.7 percent and the small-cap index FTSC> was down 0.4.

Reporting by Saikat Chatterjee; Editing by Richard Balmforth

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