FTSE off highs as US jobs data disappoints

UK shares were off yesterday's lows but gains were limited as disappointing jobs data hobbled the US markets at the open.

The DJIA was 2 points lower at 9867 - having fallen 2.65% to 9870.30 yesterday.

Private payrollls data shows just 13,000 new jobs were created last month against expectations for a 60,000 increase.  This news may not augur well for US Non-Farm payrolls data on Friday.

The FTSE 100 was faring a bit better, up 11.60 points at 4925.45 but was back close to day lows after the news from across the Atlantic.

The index has fallen 13.5% since the end of April - its 11th worst quarter in 25 years as economic data, fiscal tightening and sovereign debt woes caused investors to question the pace of the rally at the beginning of the year.  

Gains on the CAC and the Dax were just 2 points and 31 points respectively.

The euro and European markets bounced higher earlier in the day after well-received news on bank borrowing.

Banks asked for €131.9 billion in three months funding from the ECB, at the lower end of forecasts. Since the banks have been asked to repay more than €400 billion of borrowing tomorrow the news reassured investors about the strength of the banks.

Gary Jenkins, Head of Fixed Income Research at Evolution, said:  'The market interpretation may well be that liquidity has improved for European banks but you could equally argue that the lower figure actually demonstrates a reduced willingness of the banks to buy government bonds.'

He points out a year ago the opportunity to borrow significant sums of money from the ECB at 1% was probably seen by many institutions as an opportunity to put a "risk free" trade on where they used the ECB cash to purchase longer dated government bonds and then took the turn.