Britain’s FTSE 100 closed below key technical levels on Friday as more downbeat economic data intensified worries about the health of the global economy.
Import prices in the United States rose for the eighth straight month, hinting at ongoing price pressures from overseas.
Traders said the data itself was not disastrous but was enough for investors with itchy trigger fingers to sell off the previous session’s gains.
A cooling in the cycle is normal, said Stefan Angele, head of investment management at Swiss & Global Asset Management, which has around 80 billion Swiss francs of funds under management said, in comments on the recent spate of lacklustre economic numbers.
Nevertheless, fears of a recession are beginning to grow and have led to a market correction. The mid-June data will give us a clearer picture.
The data in the United States was accompanied by news of the scrapping of a large IPO, which traders put down to the recent limp economic numbers, and followed weak trade figures overnight in China.
Commodity stocks were the main drag as Britain’s leading share index succumbed to risk aversion, falling 90.54 points or 1.6 percent at 5,765.80, tracking losses in the United States and more than eroding Thursday’s gains.
The FTSE closed below the 5,800 level for the first time since late March and beneath its 200-day moving average, a key technical level, for the second time in a week, which traders said could prove pivotal.
Confidence is fragile and the index closed below its 200-day moving average (around 5,821), that has left investors wondering how far this retreat might go, said Jimmy Yates, head of equities at CMC Markets.
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Risk-sensitive miners weighed down the index as as jitters over economic recovery returned.
Kazakh miner ENRC dropped 7.5 percent as a source familiar with the situation said a third independent director is considering quitting the firm’s board,adding to a growing corporate governance crisis at the group.
Integrated oil stocks fell in tandem with crude oil on news Saudi Arabia was offering more oil to Asian refiners and a newspaper report that the world’s top exporter and will raise output to 10 million barrels per day in July.
Banks were sharply lower too following mixed messages about the progress of debt assistance to Greece.
Domestic data was also a depressant. British factory output fell at its sharpest monthly pace in two years in April.
Among individual movers, drugmaker AstraZeneca fell 2.1 percent as Barclays Capital downgraded its rating for the firm to underweight from overweight in a downbeat review of the European pharmaceuticals sector.
Broadcaster ITV shed 1.2 percent as watchdog Ofcom launched a review of how advertising is sold in Britain’s 4 billion-pound television market, with practices largely unchanged in 20 years.
ITV also suffered from Berenberg starting coverage of the stock with a sell rating and 69 pence target price.