LONDON (Reuters) - The FTSE 100 ended lower on Wednesday, with poor U.S. data reigniting concerns about the pace of recovery in the world’s biggest economy and hurting growth-linked sectors such as mining and banking.
Miners extended losses in afternoon trading after the ADP National Employment Report showed lower than forecast private sector jobs were added in March, while the Institute for Supply Management’s services sector index came in below expectations.
The UK mining index fell 2.4 percent, taking the yearly losses to 12 percent, against a 9 percent rise by the FTSE 100 index this year. ENRC, Xstrata and BHP Billiton fell by between 2 to 4.6 percent.
“There is an element of disappointment in terms of the U.S. data. Perhaps the weaker numbers that we saw today are just being used by investors as an opportunity to take profits after a very strong rally,” Henk Potts, equity strategist at Barclays Wealth, said.
The blue-chip FTSE 100 index finished 70.38 points, or 1.1 percent, lower at 6,429.28 on concerns about the sustainability of U.S. economic recovery and its impact on metals demand and banking activities.
The UK banking index fell 1.6 percent, with Barclays down 2.8 and Standard Chartered down 1.4 percent. Royal Bank of Scotland dropped 4.4 percent as the launch of a 4 billion pounds ($6.05 billion) compensation claim against the bank by investors further hurt sentiment.
After Wednesday’s disappointing ADP Private sector jobs data, investors’ focus has shifted to widely-watched U.S. non-farm payrolls data, due on Friday. Analysts forecast the payrolls hit 200,000 in March, with the unemployment rate seen holding steady at 7.7 percent.
“I expect to see a lot more risk aversion in the lead up to Friday’s figures now, with a poor jobs report potentially marking the end of the record breaking bull rally. The only question now is, how big will the correction be?,” Craig Erlam market analyst at Alpari said.
A sharp decline in heavyweight Vodafone, after Verizon denied making a bid for the company, also put pressure on the FTSE 100 index.
Vodafone took the most points off the index after its joint venture partner Verizon Communications sought to end to rampant bid speculation by saying it did not plan to buy the British group.
Vodafone fell 2 percent. However, analysts remained positive on the stock, which has jumped about 25 percent since the start of the year on the potential sale of the $115 billion stake.
“Holders shouldn’t be too concerned at the lack of deal talks confirmation,” Mike van Dulken, head of research at Accendo Markets, said.
“If anything, intensification of recent market talk just serves to highlight, potentially even increase, the perceived value of the U.S. wireless joint venture. Given this represents Vodafone’s most valuable asset ... this likely underpins the UK giant’s share price in the near term.”
Technical analysts also remained of the view that the FTSE 100 index would resume it rally after a period of consolidation.
“The market is still in an uptrend and we just have to stay with it,” said Dominic Hawker, technical analyst at Westhouse Securities.
“Even if the index breaks its immediate support of 6,350 and falls to 6,100, we would still be in the medium-term uptrend,” he said, adding the index would face strong resistance at its 2007 peak of 6,750.
($1 = 0.6607 British pounds)
editing by Ron Askew