London equities fell fast to session lows on Friday, after US employment data were much worse than even the most fearful forecasts.

In the largest monthly drop since December 1974, the November non-farm payrolls report showed 533,000 jobs were lost outside the agricultural sector in November. It was also the third largest decline in the number of people employed since the data series began in 1950.

"Today's figures seem awful - but we would stress that they are merely in line with what a number of indicators have been pointing to for months, and there could be an even bigger negative lurking out there in the months ahead, " warned Rob Carnell at ING.

The FTSE 100 was 2.7 per cent lower at 4,052.63 in the wake of the news, a loss of 111 points as the data once more prompted a swift flight from risk.

Resource stocks stayed in the vanguard of the decline on fears about the demand implications of the darkening economic outlook. The FTSE 250 was 1.6 per cent weaker at 5,710.90, a loss of 90 points.

New York markets fell in opening trade, extending the previous session's late sell-off in anticipation of the data. The Dow Jones Industrial Average was 0.8 per cent lower at 8,308.46 whilst the broader-based S&P 500 was 1 per cent weaker at 836.85.

Analysts at Bank of New York Mellon said: "While the imminent threat of a full-scale crash in the financial system may have passed, investors are now surveying the bleak landscape that has been left and wondering which of the myriad potential problems facing the global economy they should worry about first."

The falls in the FTSE were led by mining companies, which made up the five biggest losers of the day. Of those companies Lonmin dropped the furthest retreating 13.1 per cent to 573½p.

Wolseley, the supplier of plumbing and heating goods directly exposed to the US housing sector, lost 0.96 per cent to 310½ p. Stagecoach, which operates buses in the US as well as the UK, fell 6.7 per cent to 124.2p, compounding losses on the back of weak interim numbers earlier in the week.

Pub operator and brewer of Pedigree bitter Marstons was 8.1 per cent higher at 107p after it raised its dividend by 3.4 per cent to 13.27p and said it has already "taken steps" to keep its capital expenditure and costs under control. Annual profits fell 13 per cent to £85.1m, just shy of consensus forecasts of £87.2m.

Interim results for the Berkeley Group left the house builder's shares up 1.8 per cent at 803p. The results beat expectations with a 2.5 per cent increase in sales to £425.6m, heping its balance sheet show strong cash levels.

Kevin Cammack of Singer Capital Markets said "Berkeley is in a uniquely strong position to weather the downturn... If there is any housebuilder worth buying through recession this emphatically is it."