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Recovery fears crimp FTSE as US jobs data looms

Published 05/06/2011, 04:17 AM
Updated 05/06/2011, 04:20 AM
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* FTSE down 0.6 percent

* Integrated oils and miners fall as commodities slide

* Admiral, RBS, ICAG gain on earnings news

By David Brett

LONDON, May 6 (Reuters) - Britain's FTSE 100 was lower early on Friday, as global growth concerns continued to crimp risk appetite, while earnings news supported gains in Admiral, ICAG, and Royal Bank of Scotland.

The FTSE 100 was down 35.35 points, or 0.6 percent, at 5,884.63 by 0853 GMT.

London's blue-chip index has fallen around 200 points, or 3 percent, since Tuesday, as investors have grown increasingly concerned about the health of the global economy.

James Hyerczyk, an analyst at Autochartist, said: "The recent rally to 6,103.00 stopped short of the high for the year, topping at 6,105.77. Based on this range, traders can begin to look for a possible retracement to 5,804 to 5,733".

Recent British and U.S. data gave signs the recovery was stalling, prompting fears of a return to recession.

Consumers steered clear of the high street last week -- Britain's biggest department store chain John Lewis reported a sharp fall in weekly sales, hit in part by a half-day closure for the royal wedding.

There will be more economic data for investors to chew on. In Britain, investors will watch producer price data for April released at 0830 GMT, while awaiting non-farm payrolls data from the United States.

Elsewhere, in emerging markets such as China and India concerns have turned to overheating economies and government steps to tighten fiscal policy to cool demand. Metal prices continued to ebb lower on those demand concerns which, in turn, dealt a blow to the mining sector.

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Demand worries has cooled appetite for oil, with Brent crude trading below $100 a barrel, having sustained some of its biggest one-day losses ever in recent days.

Energy shares have slipped as the price of oil has fallen, with BP and Royal Dutch Shell down 1.4 percent and 1.5 percent respectively.

TRAVEL HIGHER

The weaker oil price was good news from travel and transport companies, whose margins should benefit from cheaper fuel costs.

Carnival and Tui Travel gained 2.6 percent and 1.3 percent respectively, while International Consolidated Airlines added 2.5 percent, helped by narrower first-quarter operating losses.

"We are encouraged by recent trends in capacity and with the fall in the oil price recently we continue to see upside in the airline sector," said Atif Latif, director of trading at Guardian Stockbrokers.

Elsewhere, 83-percent government-owned Royal Bank of Scotland rebounded 3.7 percent after its first quarter update.

The British banking sector was rattled on Thursday by Lloyds's 3.2 billion pound charge to cover compensation for people sold insurance they could never claim or did not know they were buying.

RBS said on Friday while the impact from having to settle these insurance claims could be "material", it was too early to provide an estimate.

Sticking with results, British motor insurer Admiral climbed 5 percent after saying it was likely to beat 2011 profit forecasts after rising customer numbers drove a 56 percent jump in first-quarter sales.

British engineer IMI fell 2.4 percent after saying first-half results would be ahead and naming Roberto Quarta as its new chairman.

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IMI's shares had a good run in the lead-up to its trading update. They hit an all-time high on Tuesday of 1,126 pence, while the 14-day Wilder Smoothing relative strength index showed the shares neared overbought territory on the same day. (Editing by Dan Lalor)

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