FTSE falls sharply after weak US jobs data

Carphone Warehouse was one of just a handful of FTSE 100 stocks to end in positive territory Friday as the index suffered a sharp reverse.

The mobile phone retailer touched a high of 360p as dealers bet that the iPhone had been selling "like hot cakes" over the Christmas period. Carphone has the exclusive rights to distribute the Apple phone/music player, along with network operator O2.

Steve Clayton, analyst at Mirabaud Securities, said there had been a "fantastic consumer response" to the iPhone, adding it was a "sufficiently innovative product to be assured of selling well, especially in an exclusivity situation".

Carphone is due to update the market this month, although it is far from certain that it will be permitted by Apple to say how many iPhones it has sold. A lack of detail would only add to the uncertainty in an already heavily shorted stock.

The stock was further boosted by rumours that either Vodafone or Best Buy, the US retailer, were poised to bid for Carphone.

Analysts were not convinced, although a move by Best Buy, which owns just under 3 per cent of Carphone, is seen as the more likely of the two. Founders Charles Dunstone and David Ross own just over half of Carphone and are unlikely to sell out completely, although they could be interested in selling part of their holdings to Best Buy. Carphone closed up 2.6 per cent at 340¾p.

The wider market went into reverse as news of a sharp fall in US jobs growth heightened fears that the world's largest economy could be dragged into recession. The FTSE 100 ended 130.9 points, or 2 per cent, lower at 6,348.5, while the FTSE 250 slid 275.6 points, or 2.6 per cent, at 10,265.3.

The slide dragged the blue-chip index to a 1.7 per cent loss since the turn of the year, while the mid-caps are down 3.7 per cent.

Fears of a US recession hit the miners in particular, which had been higher earlier in the session. Antofagasta closed down 4 per cent at 688p, although losses were limited in Xstrata, down 1.5 per cent to £35.22, which is a rumoured target for Vale of Brazil, and Vedanta Resources, off 1.3 per cent at £21.36, said to be in the sights of Baosteel of China.

The retailers came under further pressure as dealers feared the worst for an already battered sector. Confidence was further hit by a massive profit warning from Land of Leather, down 48 per cent to 59p.

Marks and Spencer lost 4.5 per cent to 518p as Citigroup slashed its price target from 750p to 650p ahead of next week's trading update while rival Next, which this week gave up on its ambition to return to underlying sales growth in 2008, fell 5.7 per cent to £14.64 as Bear Stearns initiated coverage with an "underperform" rating. Kingfisher, owner of the home improvement chain B&Q, fell 6.8 per cent to a new low of 130p.

ITV fell 5.6 per cent to a fresh five-year low of 78.1p amid concerns about its share of the advertising and viewing markets amid scepticism about the broadcaster's new winter schedule, unveiled this week.

London Stock Exchange, down 6.3 per cent to £18.54, succumbed to profit-taking after its record high in the previous session. LSE gained 10 per cent last month.

Berkeley Group lost 18.9 per cent to £10.54 as the property company began trading without entitlement to a 200p-a-share capital return.

Moneysupermarket fell 10.6 per cent to 124¼p after UBS cut its target price for the comparison website from 235p to 155p and flagged up fears over the impact of the credit crunch.

Close Brothers was back in focus amid rumours of a £10.40 counterbid for the investment bank from Blackstone, the private equity company. Close has already rejected a 950p-a-share approach from Cenkos, a smaller UK rival, and Landsbanki of Iceland, while others suitors are also reported to have cast an eye over the company. Its shares ended up 1.6 per cent at 965p.