Global stock markets struggled to make headway after weaker-than-expected growth from the world’s biggest economy weighed on mining and commodity stocks.
The 2.5% first-quarter growth from the American economy was weaker than economists’ hopes for 3.1% expansion. But while it dampened prospects for growth, it also prompted speculation the US Federal Reserve will continue injecting stimulus, preventing deeper market falls.
The FTSE 100 Index was down 31 points at 6411, while European markets also traded marginally lower. On Wall Street, the Dow Jones Industrial Average was fractionally up after the opening bell.
Crude oil futures were lower, signalling the potential for another year of sluggish global growth and adding to worries over the slowing Chinese economy.
That tempered a run of stock market enthusiasm in recent days, which have been boosted by prospects for more central bank support, although a meeting of policymakers in Japan went as expected earlier today, with interest rates left at 0.1% and quantitative easing unchanged after a huge bond-buying programme last month.
Chris Williamson, economist at Markit, said: “Even this weaker-than-hoped-for growth rate exaggerates the true underlying momentum in the economy, as growth of final demand slowed compared with the fourth quarter.
“The disappointment will push back expectations of when the Fed will start to withdraw its stimulus, especially as recent data suggest the rate of growth could weaken again in the second quarter.”
The US expansion compared with a sluggish 0.4% growth in the previous three months.
The heaviest loser in London was Eurasian Natural Resources, with shares down 6% or 17.5p to 271.5p. Also in the mining sector, Xstrata was down 3% or 29.5p or 975.5p, Evraz fell 5.5p to 161.1p and Glencore International was down 10.7p to 320p.
Leading the FTSE 100’s risers board was Capita, up 21p to 883.5p, after the outsourcing provider announced a new joint venture with the Cabinet Office.
Meanwhile, Prudential shares were higher after it hired Standard Life’s chief financial officer Jackie Hunt to run its UK and Europe division.
The Pru rose 24p to 1115p but Standard Life fell 3.9p to 388p, having risen sharply this week in the wake of a strong trading update.
Meanwhile, shares in advertising and marketing firm WPP were slightly lower despite posting revenues growth of 5.9% for the first quarter, including a better-than-expected rise of 11.9% from its UK division.
Analysts said investors may have already factored in the expected good performance, given a 20% rise in the company’s share price this year.