London stocks rounded the week off with heavy losses amid a global risk-off mood after a weak U.S. jobs report spurred worries on the health of the American economy, while losses in commodity-linked stocks added to the downbeat sentiment.

The blue-chip FTSE 100 index was down 1.3%, while the mid-cap FTSE 250 index slid 3.0% to clock its worst day since September 2022.

The unemployment rate in the U.S. jumped to a near three-year high of 4.3% in July amid a significant slowdown in hiring, heightening fears the labor market was deteriorating and potentially making the economy vulnerable to a recession.

Traders recalibrated their bets to price in a steeper than 25 basis point cut in the interest rates by the U.S. central bank in September.

“It’s time for the Fed to cut the federal-funds rate. The data quality issues make our picture of the economy somewhat murky. But there’s enough risk to call for substantially cutting rates now,” said Preston Caldwell, chief US economist at Morningstar.

London’s FTSE 100 falls amid broader declines as investors cautious ahead of US data

In London, investment banking and brokerage stocks declined 4.3% after a 1.1% loss in the previous session.

Personal goods shares like Burberry fell nearly 5% after Italian peer Salvator Ferragamo reported a 41% decline in its first-half operating profit.

Industrial metal miners slipped 2.1% to hit their lowest level since March on lower gold and copper prices.

Banks extended their declines from the previous session with a 3.6% loss.

The sector had logged its worst day since February 2022 on Thursday on a quarter point rate cut by the Bank of England and as French lender Societe Generale cut its guidance for retail net interest income.

IAG Group climbed 4.7% to top the FTSE 100 after the British Airways owner terminated its proposed takeover of Spain’s Air Europa, citing regulatory concerns.