A JOBS data shock from the US sent the London market diving into retreat yesterday as gloom gathered over trading floors.
America's June jobless figures brought an end to a run of five straight months of improvements, dampening hopes that the worl
d's largest economy was poised for a strong recovery soon.
The FTSE 100 index slumped more than 2 per cent to close down 106.4 points at 4,234.3.
A report on unemployment in the 16 countries that use the euro also hit sentiment after it showed a hike to its highest level in ten years.
Philip Gillette, a sales trader at IG Index, said: "This proves that we may not be at the bottom yet. The world's biggest economy is going to be dragged down.
He added: "Sentiment has changed over the last two or three weeks, from being very bullish to people realising the fundamentals are not that rosy."
Concerns over the US and European figures sent oil prices tumbling to their lowest level in a month, with a 3 per cent slump to $66 a barrel.
On the back of that, oil-related shares suffered. BP fell 9.05p to 480.95p, while in the mining sector Anglo American dropped 106.5p to 1,726p while Rio Tinto eased 123p to 2,035p.
In a day in which just four firms ended on the risers' board, drinks firm Diageo topped the leaders with an 8p rise to 905p.
On Wednesday Diageo announced 900 job losses in Scotland as part of ongoing cost cutting.
Fellow drinks firm SAB Miller fell back after earlier gains, losing 20p to 1,260p as it said it was considering selling a stake in its South African business.
Mobile phone giant Vodafone lost 4p to 115.5p after it buried the hatchet with Carphone Warehouse and agreed to sell its contract mobiles across the chain's outlets. The firm dumped the chain as a supplier of contract mobiles in favour of an exclusive deal with Phones4U in October 2006, but has returned to the chain in an increasingly tough and competitive UK market.
In the FTSE 250, shares in pubs and brewing business Greene King rose 3 per cent or 12.25p to 422.25p after the Belhaven owner said recent warm weather had boosted trade. A broker upgrade from Investec Securities also helped the pub group make gains.
But there was no such fun for retailer Game, which tumbled 13 per cent, or 22p to 142p, after detailing lacklustre trading figures for the first half of the year.
Back in the top flight, banks failed to end higher after early rises following a broker upgrade for Standard Chartered and confirmation of the formal appointment of acting chairman John Peace in the role. Shares in the bank fell 25p to 1,155p.
