FTSE down as U.S. sentiment weighs

By David Brett

LONDON (Reuters) - Blue-chip stocks ended a fourth consecutive week in negative territory on Friday as U.S. data heaped more gloom on the global economic outlook, with energy stocks weighing most on the top share index.

The FTSE 100 .FTSE closed down 31.49 points, or 0.8 percent, at 4,127.17, for a weekly loss of 2.3 percent, its lowest closing level since April 28.

"The fundamentals haven't been all that encouraging today -- the U.S. trade balance has contracted further showing waning demand domestically," said Giles Lee, senior dealer at CMC Markets.

The U.S. trade gap narrowed unexpectedly to $26 billion (16 billion pounds) in May to the lowest reading since November 1999 as exports rose in spite of weak global demand and imports shrank.

"The Michigan consumer confidence reading has plummeted whilst falling output prices in the UK are painting a bleak picture for domestic inflation in the months ahead."

The Reuters/University of Michigan preliminary July consumer sentiment survey posted at 64.6 from 70.8 in June.

Energy stocks slid as oil prices kept below $60 per barrel, on track for its largest weekly fall since January.

BP (BP.L), Royal Dutch Shell (RDSa.L), BG Group (BG.L), Tullow Oil (TLW.L) and Cairn Energy (CNE.L) fell between 0.8 and 1.5 percent.

The latest report from the International Energy Agency predicted an increase in oil consumption in 2010, but expected it to stay negative in 2009 and saw limited demand for OPEC crude.

Chevron's (CVX.N) warning about second-quarter results also weighed on the sector, with U.S. stocks dropping on jitters that an economic recovery and corporate profits will be anaemic.

Traders said earnings from U.S. and European companies over the next few weeks would be critically important in determining market direction.

INSURERS, DRUGMAKERS HIT

Aviva (AV.L) was the index top faller, off 4.9 percent on lingering speculation that the life insurer is going to cut its dividend.

The uncertainty spread to other life insurers as Standard Life (STAN.L), Prudential (PRU.L), Legal and General (LGEN.L) and Old Mutual (OML.L) dropped between 2.7 and 3.2 percent.

Drugmakers also took a beating, with AstraZeneca (AZN.L), GlaxoSmithkline (GSK.L) and Shire (SHP.L) down between 1.1 and 1.5 percent.