US private sector jobs disappointment sees FTSE go into reverse

A worse than expected jobs report from the US private sector has sent leading shares back into negative territory. After a sigh of relief following news that European banks had asked to borrow just €132bn from the ECB today - thus easing some of the fears about their financial fragility - the US numbers have unnerved investors again. So the FTSE 100 is now down 11.70 points at 4902.52, having touched 4961.90 earlier. US futures are now predicting a 14 point opening on Wall Street after earlier predictions of a 53 point rise. The ADP survey showed US private employers added just 13,000 jobs in June, compared to expectations of around 60,000. And it compares to a 57,000 increase in May, revised upwards from 55,000. Another sign of a slowdown in the US economy - added to the existing fears of a cooling of growth in China and a downturn in Europe due to the planned austerity measures - was not what investors wanted to hear. This does not bode too well for the non-farm payroll numbers due on Friday, which are widely watched for their effect on the markets. Analysts currently expect a fall of around 110,000 in June. There is a school of thought which suggests the ADP numbers can provide a good guide to how the payroll figures turn out. If this is indeed the case, then expect disappointment with the figures, followed swiftly by another hit on share prices.