Footsie hits two-week low led by sell-off in financial and mining stocks

FTSE: 5,292.03 (–126.62) Mid-250: 10,381.02 (–195.79) Small Cap: 2,984.47 (–26.60):UK STOCKS tumbled the most in two weeks yesterday, led by a sell-off in banks and commodity producers, after a worse than forecast US jobs report added to concern that the country's economic recovery may be at risk.

The benchmark FTSE 100 Index dropped 126.62, or 2.3 per cent, to 5,292.03 in London, its biggest decline since August 18th.

The employment data “badly missed market expectations in August to show complete stagnation”, said Joshua Raymond, chief market strategist at City Index in London. “With no jobs created, it adds yet more pressure on the Federal Reserve to reignite the US economic recovery.”

The gauge has climbed 3.2 per cent this week after last month’s 7.2 per cent sell-off dragged equities to their cheapest valuation as a multiple of estimated earnings since March 2009.

Yesterday’s report showed US employment unexpectedly stag-nated in August as employers became less confident in the strength of the recovery. Payrolls were unchanged last month after an 85,000 gain in July that was less than initially estimated. That missed the median economist forecast of 68,000 in a Bloomberg News survey.

Barclays slumped 8.4 per cent to 165.2p, halting a three-day rally.

Lloyds Banking slid 7.1 per cent to 33.12p and Royal Bank of Scotland dropped 5.4 per cent to 24.84p.

Kazakhmys led mining companies lower, sinking 3.4 per cent to 1,040p as base metals extended declines.

Xstrata lost 3.2 per cent to 1,018.5p and Rio Tinto retreated 2.5 per cent to 3,674p.

BP fell 3.6 per cent to 374.4p and Royal Dutch Shell declined 1.9 per cent to 2,036.5p as crude oil tumbled in New York.

AstraZeneca retreated 3.7 per cent to 2,809.5p after the drug maker reported that its Crestor treatment for cholesterol did not reach statistical significance in lowering arterial plaque as a percentage volume, the study’s main measure of effectiveness.

London Stock Exchange slid 2.3 per cent to 911p, falling for the first time in nine trading days. The UK bourse is holding talks with LCH. Clearnet to buy the world’s biggest clearinghouse for swaps.

Randgold Resources paced advancing shares on the FTSE 100, rallying 4.3 per cent to 6,670p as gold prices extended gains in New York. – (Bloomberg)