By Dominic Lau
The FTSE 100 closed down 1.3 percent, or 56.83 points, at 4,448.54, for a weekly loss of 2.5 percent. The benchmark fell more than 31 percent last year, its worst annual drop since its launch in 1984.
Oil producers were the biggest drag on the index as crude prices fell below $40 a barrel. Royal Dutch Shell , BP , BG Group and Tullow Oil were off between 1.5 and 2.8 percent.
Miners were also big losers, as investors continued to shun the sector after a recent rally and as Deutsche Bank pointed to a gloomy outlook for metal prices, leading it to cut earnings expectations for the sector.
Anglo American , Xstrata , Rio Tinto , Vedanta Resources , Rangold Resources , Kazakhmys and BHP Billiton dropped between 0.6 and 8.2 percent.
U.S. employers shed 524,000 from their payrolls in December, driving the unemployment rate to its highest level in almost 16 years.
"The fact of the matter is that these numbers were poor, whether they came in within expectations or not," said Peter Dixon, UK economist at Commerzbank.
"If you look at the two months in November and October together, it was the biggest two months' decline in employment since the end of World War Two, which tells you how desperate the situation is in the U.S. economy," Dixon said.
"It is hardly surprising that the markets are nervous. They've got every reason to be pessimistic, because frankly the outlook for the U.S. economy and the rest of the world in 2009 remains dismal."
Meanwhile, U.S. wholesale inventories fell in November, while sales posted a record decline.
In the UK, factory output slumped in November at its fastest annual pace since 1981, increasing the likelihood that the economy shrank sharply at the end of 2008 and faces a deep recession in 2009.
BETTER RETAILERS
Banks, at the epicentre of the financial crisis, were generally weaker, with the FTSE 350 banks index down 0.1 percent, after index heavyweight HSBC fell.
Lloyds TSB , HBOS , Standard Chartered and Royal Bank of Scotland , however, were all between 0.6 and 7.8 percent higher.
The British government plans talks with banks about boosting lending to business after the Bank of England cut interest rates to a record low.
Retailers also saw some demand after a rash of trading updates this week were no worse than feared and after John Lewis said its weekly department store sales to January 3 rose 27 percent.
Marks & Spencer , Next , Home Retail and Kingfisher rose between 0.8 and 4.4 percent.
BSkyB sagged 5.3 percent after Goldman Sachs downgraded the broadcaster to "sell" from "neutral," while mid-cap ITV lost 4.4 percent, suffering a downgrade to "sell" from the same broker.
Wolseley sank 3 percent after Deutsche Bank cut its price target on the building materials distributor.
(Editing by Will Waterman)
LONDON (Reuters)
The FTSE 100 closed down 1.3 percent, or 56.83 points, at 4,448.54, for a weekly loss of 2.5 percent. The benchmark fell more than 31 percent last year, its worst annual drop since its launch in 1984.
Oil producers were the biggest drag on the index as crude prices fell below $40 a barrel. Royal Dutch Shell , BP , BG Group and Tullow Oil were off between 1.5 and 2.8 percent.
Miners were also big losers, as investors continued to shun the sector after a recent rally and as Deutsche Bank pointed to a gloomy outlook for metal prices, leading it to cut earnings expectations for the sector.
Anglo American , Xstrata , Rio Tinto , Vedanta Resources , Rangold Resources , Kazakhmys and BHP Billiton dropped between 0.6 and 8.2 percent.
U.S. employers shed 524,000 from their payrolls in December, driving the unemployment rate to its highest level in almost 16 years.
"The fact of the matter is that these numbers were poor, whether they came in within expectations or not," said Peter Dixon, UK economist at Commerzbank.
"If you look at the two months in November and October together, it was the biggest two months' decline in employment since the end of World War Two, which tells you how desperate the situation is in the U.S. economy," Dixon said.
"It is hardly surprising that the markets are nervous. They've got every reason to be pessimistic, because frankly the outlook for the U.S. economy and the rest of the world in 2009 remains dismal."
Meanwhile, U.S. wholesale inventories fell in November, while sales posted a record decline.
In the UK, factory output slumped in November at its fastest annual pace since 1981, increasing the likelihood that the economy shrank sharply at the end of 2008 and faces a deep recession in 2009.
BETTER RETAILERS
Banks, at the epicentre of the financial crisis, were generally weaker, with the FTSE 350 banks index down 0.1 percent, after index heavyweight HSBC fell.
Lloyds TSB , HBOS , Standard Chartered and Royal Bank of Scotland , however, were all between 0.6 and 7.8 percent higher.
The British government plans talks with banks about boosting lending to business after the Bank of England cut interest rates to a record low.
Retailers also saw some demand after a rash of trading updates this week were no worse than feared and after John Lewis said its weekly department store sales to January 3 rose 27 percent.
Marks & Spencer , Next , Home Retail and Kingfisher rose between 0.8 and 4.4 percent.
BSkyB sagged 5.3 percent after Goldman Sachs downgraded the broadcaster to "sell" from "neutral," while mid-cap ITV lost 4.4 percent, suffering a downgrade to "sell" from the same broker.
Wolseley sank 3 percent after Deutsche Bank cut its price target on the building materials distributor.
(Editing by Will Waterman)
LONDON (Reuters)
