London’s markets closed in the red after buoyant service sector figures and strong US jobs data rekindled inflation concerns.
A slowdown in US jobless claims was cautiously welcomed by Wall Street traders who were worried improvement in the economy would see central banks ease current support measures and potentially raise inflation rates.
In London, traders were unnerved by inflation concerns and a poor showing by travel firms but welcomed their own positive service sector data, which revealed the strongest growth in output for 24 years.
The FTSE 100 closed 43.65 points lower, or 0.61%, at 7,064.35 on Thursday.
Chris Beauchamp, chief market analyst at IG, said: “Indices have looked wobbly for a few days, with the swift reversal from Tuesday’s peak showing that something was amiss with global risk appetite.
“Today has seen those concerns validated to an extent, with some notable losses for tech and other US growth stocks, even if losses are more contained elsewhere.”
The Dow Jones and S&P 500 both opened marginally lower as a result, with the Tech heavy Nasdaq index particularly shaken, dropping almost 1%.
In mainland Europe, the knock-on from Wall Street resulted in cautious trading but German stocks remained in positive territory amid positive Eurozone economic data.
The German Dax increased by 0.19% and the French Cac moved 0.21% lower.
Meanwhile, sterling dipped slightly against the US dollar after the greenback was bolstered by the strong APD jobs reading.
The pound decreased by 0.09% versus the US dollar to 1.410 and increased by 0.02% against the euro to 1.163.
Airlines were among the biggest losers on Thursday after the Government removed Portugal from the green travel list, with British Airways owner IAG, EasyJet and Tui all tumbling.
Elsewhere in company news, discount retail group B&M dipped in value after it warned investors to expect a drop in revenue in its current financial year following a bumper performance during the pandemic.
The group said it was already seeing signs of a slowdown compared to the frenzy a year ago, with a 1% decline in sales for the period since the financial year ended in March.
Shares were 22p lower at 539.2p.
Office space operator Workspace saw shares slip after it swung to a loss for the past year as rental income was dented by lockdown restrictions and the shift towards home working.
Shares in the company fell by 29.5p to 883p after it posted a £235.7 million pre-tax loss for the year to March 31, compared with a £122 million profit a year earlier.
Defence firm Chemring shares climbed 17.5p to 324p after it saw its pre-tax profit increase by more than £5 million to £24.3 million in the six months to the end of April as it benefited from cybersecurity growth.
The price of oil nudged lower amid concerns over tightening travel restrictions in Europe.
Brent crude decreased by 0.48% to 71.01 dollars per barrel.
The biggest risers on the FTSE 100 were Johnson Matthey, up 71p at 3,143p, Standard Life Aberdeen, up 4.4p at 278.4p, Ferguson, up 142p at 9,802p, and Phoenix, up 8p at 752p.
The biggest fallers on the FTSE 100 were IAG, down 11.22p at 198.18p, Fresnillo, down 44.4p at 865.6p, National Grid, down 39.3p at 921.3p, and B&M, down 22p at 539.2p.