FTSE:5,990.58 (–63.97) Mid-250:12,074.26 (–93.55) Small Cap:3,324.57 (–15.41)

BRITAIN’S TOP share index dropped yesterday, reversing modest early gains, led by weaker banks and commodity stocks as risk aversion returned after the latest weak US jobs data raised fears about the health of the world’s largest economy.

At the close, the FTSE 100 was down 63.97 points, or 1.1 per cent, at 5,990.58.

Miners led the blue chip retreat, tracking weakness in base metal prices as demand worries were reignited by the US data.

US non-farm payrolls rose only 18,000 in July, the weakest reading since September, well below consensus expectations for a 90,000 rise.

“Even given that this data is volatile and subject to large revisions, this number is worrying,” said Louise Cooper, Markets Analyst at BGC Partners.

Integrated oils suffered as crude prices dropped almost 3 per cent after the US jobs reports, and banks fell back as worries over the US economy added to concerns about the European debt situation.

Away from the big three sectors, satellite broadcaster BSkyB was the biggest individual FTSE 100 faller, down 7.6 per cent after the British government said it would take the closure of the Murdoch tabloid News of the World, at the heart of a phone hacking scandal, into consideration when deciding on the mogul's planned $14 billion bid to buy BSkyB.

Tobaccos were the best sector performers, wanted for their defensive qualities as investors’ risk appetite faded, with British American Tobacco and Imperial Tobacco ahead 0.8 per cent and 0.7 per cent respectively.

Imperial Tobacco also got a boost from an end to the cigarette price war in Spain, according to traders, with Philip Morris having reversed its recent price cut.

Drug stocks rallied after recent falls, with GlaxoSmithKline adding 0.7 per cent and Shire up 0.8 per cent.

Associated British Foods was the top blue chip riser, ahead 1.7 per cent having dropped earlier in the week in sympathy with a warning from Dutch peer CSM. The British firm is scheduled to release a third-quarter trading update next Thursday.

Marks & Spencer added 0.6 per cent following recent weakness and ahead of a trading update due next week, with peer Next adding 0.5 per cent. – (Reuters)