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FTSE100 hits 2012 lows amid eurozone fears

The opening of equity markets this morning was first chance investors had to react to news that had emerged over the extended Easter break, the FTSE 100 closing on Friday at 5723.6. Whilst equity markets were closed for Good Friday, the US Bureau of Labor Statistics released payroll data that showed the economy had added 120,000 jobs during the month of March, considerably less than the 200,000 that were expected by economists. It broke a positive trend of employment data, and exacerbated fears that the world’s largest economy is more fragile than many may have presumed.

The news was compounded by Chinese trade balance data released today that showed a surplus, i.e. more goods were exported form the country than imported into it. With exports up 8.9% year on year and imports growing only 5.3% (down from a strong 39.6% last month), the data pointed towards improving global demand (and hence economy) but a weaker one domestically. It also appeared that concerns were mounting within Europe, with Spanish 10 year yields rising and breaching the 6% level, whilst those of the safe-haven Germany were trading under 1.7%.

There were very few stocks in positive territory on the UK’s top share index; although Randgold Resources posted an impressive 5.2% gain after the downtrodden gold miner issued a statement suggesting that the group’s operations in Mali were largely unaffected by the recent military coup. The bottom of the FTSE 100 was populated with those companies traditionally sensitive to global growth and recessionary fears, with a host of miners and banks trading more than 4% lower. Vedanta Resources was the worst performer with its 6.5% loss, with Barclays not far behind with a 5.9% decline to 206.3p.

Having lurched lower at the open to trade down by 1% for most of the day, there was a noticeable decline in risk sentiment around 3pm and the market rapidly lost ground to close 128 points (2.2%) lower at 5595.6. The loss did however appear moderate given that the FTSE MIB (the Italian market) was sold off by 5% and with the French CAC40 lost 3.1% on the day.

This was posted in Bdaily's Members' News section by James .