The FTSE 100 gave back early gains to close lower on Friday as a weak US jobs report boosted hopes of rate cuts, but also raised fears the world’s biggest economy was slowing.

“The [US] labour market is in a precarious position,” said analysts at Wells Fargo, putting the Federal Open Market Committee in a position “where it will imminently start cutting the federal funds rate”.

The FTSE 100 index closed down 8.66 points, 0.1%, at 9,208.21. It had earlier traded as high as 9,253.53.

The FTSE 250 ended 100.86 points higher, 0.5%, at 21,575.54 and the AIM All-Share finished up 3.63 points, 0.5%, at 765.63.

For the week, the FTSE 100 rose 0.2%, the FTSE 250 fell 0.1% and the AIM All-Share firmed 0.2%.

In New York, at the time of the London equities market close, the Dow Jones Industrial Average was down 0.7%, as was the S&P 500, while the Nasdaq Composite dropped 0.5%.

Friday saw another weak jobs report in the US with growth in non-farm payrolls well below market expectations, while the unemployment rate moved higher.

According to the Bureau of Labour Statistics, non-farm payroll employment increased by 22,000 in August, easing from 79,000 in July.

The July reading was upwardly revised from 73,000, however, June’s reading was knocked down to a net loss of 13,000 jobs from a gain of 14,000 previously reported.

The latest data fell short of the FXStreet cited consensus of 75,000.

The jobless rate edged up to 4.3% in August, as expected, from 4.2% in July.

Thomas Feltmate, senior economist at TD Economics, said: “There’s no escaping that the labour market is softening, and quickly.

“Fed officials have become increasingly concerned about the downside risks to the labour market, and this morning’s report will not assuage those fears.

“We maintained an out-of-consensus view since April that the Federal Reserve would need to deliver 75 basis points in rate-relief this year, and our conviction remains high that it will occur.”

Wells Fargo said the jobs engine, that has been integral to US economic growth defying expectations for the past four years, is “stalling”.

“With elevated risk of further downward revisions, the recent pace of hiring is dangerously close to crossing into negative territory, where job market weakness quickly becomes self-reinforcing,” the broker warned.

The report put pressure on the dollar and saw bond yields ease further.

The pound jumped to 1.35 dollars late on Friday afternoon in London, compared to 1.34 at the equities close on Thursday. The euro firmed to 1.17.

The yield on the US 10-year Treasury was quoted at 4.07%, narrowed from 4.20% on Thursday. The yield on the US 30-year Treasury was quoted at 4.79%, eased from 4.90%.

In Europe, the Cac 40 in Paris ended down 0.6%, while the Dax 40 in Frankfurt closed 0.9% lower.

Shares in Cobham-based housebuilder Bereley rose 3.0% as it said it is on track to report pretax earnings in line with its £450 million forecast for the financial year ending April 30, 2026, and down 15% from £528.9 million in financial 2025.

Berkeley said it has already secured 85% of its guided pretax earnings through exchange sales contracts, and that the firm remains on target to achieve a similar level of profit in financial 2027.

Berkeley’s update came as the Halifax house price index found that the average UK house price increased by 0.3% to a new record high of £299,331 in August.

“Affordability remains a challenge, but there are signs of improvement,” said Amanda Bryden, head of mortgages at Halifax.

Other housebuilders took heart from the news. Persimmon rose 2.8%, Barratt Redrow by 2.1% and Taylor Wimpey by 2.2%.

Aviva climbed 1.6% as Goldman Sachs restarted coverage of the insurer with a ‘buy’ rating and 736 pence price target.

But Admiral fell 3.0% as Peel Hunt downgraded to “sell” from “reduce” believing the outlook for underwriting margins in the UK motor space is “starting to deteriorate”.

A sharp drop in the oil price saw BP and Shell drop 2.6% and 2.3% respectively. A barrel of Brent traded at 65.14 dollars late Friday afternoon, down from 67.02 on Thursday.

Next rose 0.8% after UK retail sales accelerated ahead of expectations in July following continued good weather.

Total retail sales volumes are estimated to have risen by 0.6% in July, accelerating from an increase of 0.3% in June and comfortably beating an FXStreet-cited consensus for 0.2% growth in July.

Food store sales rose 2.5% in July to their highest level since February 2022, boosted by good weather and events such as the Women’s Euro 2025 tournament. Food store sales had increased 0.7% in June.

The ONS noted that the UK had its fifth-warmest July on record this year, according to the Met Office climate summaries.

The biggest risers on the FTSE 100 were Entain, up 28.00p at 864.40p, Berkeley Group, up 108.00p at 3,690.00p, Ashtead, up 152.00p at 5,538.00p, Persimmon, up 30.00p at 1,100.00p and Melrose, up 16.00p at 616.00p.

The biggest fallers on the FTSE 100 were Admiral, down 102.00p at 3,342.00p, BP, down 11.25p at 415.65p, Barclays, down 9.20p at 361.05p, NatWest, down 12.00p at 506.00p and Shell, down 60.50p at 2,627.50p.

Monday’s local corporate calendar has half-year results from insurer Phoenix Group.

The global economic calendar on Monday has China trade data.

Later in the week, US inflation figures and the ECB interest rate decision, both on Thursday, will be closely watched.