Oil companies fall as crude prices slide almost 2%
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U.K. stocks pared back from an all-time intraday high and ended only a slight gain on Friday after U.S. jobs growth fell short of expectations, raising questions about the strength of the world's largest economy.
The FTSE 100 Index rose less than 0.1% to close at 7,547.63, trimming an advance of as much as 0.7%. That means the benchmark ended at exactly the same level as the previous record close of 7,547.63 set on May 26.
For the week, the FTSE ended flat.
Earlier in the day, the index peaked, scoring an intraday record of 7,598.99, but was pulled back along with the wider European and U.S. stock benchmarks after U.S. nonfarm data missed forecasts. The report showed 138,000 jobs were added to the economy in May (http://www.marketwatch.com/story/us-adds-138000-jobs-in-may-unemployment-drops-to-16-year-low-of-43-2017-06-02), far below the consensus forecast of 185,000. The unemployment rate, however, fell to 4.3% from 4.4%, the lowest since 2001.
"The U.S. recovery is not gaining steam, but instead is just plugging along. While the overall numbers were positive, key pieces of the report missed expectations and confirmed the U.S. economy is not gaining momentum but instead may be stuck in a rut," said Chris Gaffney, president of World Markets at EverBank, in a note.
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Stock markets in Europe are highly sensitive to growth in the U.S. as the country is a major consumer of European products and generally a driver of global growth.
The dollar pared back after the report, and eventually turned lower against the pound. Sterling traded at $1.2901, up from $1.2881 late Thursday in New York. A weaker pound tends to boost the FTSE 100 as about 75% of revenues for those listed companies come from overseas.
Sterling has slipped in recent days as opinion polls ahead of the June 8 general election in the U.K. point to a much tighter race than anyone had expected. A survey out earlier this week showed Theresa May's Conservative Party's lead over Labour had narrowed to three points, down from 20 points about a month ago.
Read:5 things to know about the U.K.'s general election next week (http://www.marketwatch.com/story/5-things-to-know-about-the-uk-general-election-next-week-2017-06-01)
And see:The U.K. election--the nightmare, best and most likely scenarios for stocks (http://www.marketwatch.com/story/uk-election-the-nightmare-best-case-and-most-likely-scenarios-for-stocks-worldwide-2017-06-01)
Stock movers: Energy companies declined, as oil prices lost almost 2% (http://www.marketwatch.com/story/oil-prices-stay-weak-as-investors-return-to-worries-over-rising-production-2017-06-02) after President Trump's withdrawal from the Paris climate agreement fueled speculation U.S. producers will start pumping more.
The bearish take on this is "that Trump will make it easier to increase production because he doesn't care about environmental issues related to the shale industry" said Torbjorn Kjus, chief oil analyst at DNB Bank.
"He only wants to create jobs. So this scrapping of the Paris agreement is probably taken as it will provide more oil production. It should also provide more oil demand, but that factor is probably overlooked today," he added.
Shares of BP PLC (BP.LN) (BP.LN) fell 1.5%, and Royal Dutch Shell PLC (RDSB.LN)(RDSB.LN) gave up 1%. Outside the FTSE 100, Tullow Oil PLC (TLW.LN) plunged 5.4%.
Economic data: The U.K construction purchasing managers index for May came in stronger than expected, showing a rise rather than the drop expected. The PMI posted 56, up from 53.1 in April and above the 52.7 forecast. A reading above 50 signals expansion.
"U.K. construction companies experienced a sharp rebound in business activity during May, helped by the fastest upturn in residential work since the end of 2015," said IHS Markit/CIPS, which released the report.
(END) Dow Jones Newswires
June 02, 2017 12:05 ET (16:05 GMT)