The FTSE 100 today recovered after falling into bear market territory in early trading as the US revealed it had managed to maintain its jobless rate at 5.5 per cent in June.

This morning, the blue chip index fell 54.3 points to 5,372, which was more than 20 per cent below the peak reached in October of 6,730.71. By the close, it was trading up 50.3 points at 5,476.6.

A decline of 20 per cent is the generally accepted definition of a bear market. If the FTSE 100 had fallen below 5,384.57 equities would have been trading in bear territory.

Earlier today, shares fell on a further spike in oil prices to a new record of $145.75 a barrel, 33 per cent higher than prices at the end of last year.

The FTSE's lowest point so far this year was in March, when the index fell to 5,414 points as Bear Stearns, the US investment bank, was close to collapse. It was subsequently rescued by rival, JP Morgan Chase.

In the US the unemployment rate stayed the same in June as it was in May when 62,000 jobs were cut in the US. The Dow Jones industrial average rose 66.3 points to 11,281.8.

US Government data revealed showed that US employment is in its longest period of decline since the technology bubble burst and the September 11 terrorist attacks in 2001.

Almost 440,000 people have lost their jobs in the year so far as housing market woes have chilled growth.

However, on the upside, the rate of job losses in the retail sector, one of the main engine rooms of the US economy, appeared to slow with the number of jobless falling from 22,600 in May to 7,500 last month.

Conversely, jobs in the construction industry fell again by 43,000 after dropping by 37,000 in May as the housing slump worsened.

Henry Paulson, the US Treasury Secretary, who is currently on a two-day visit to London, said today: "The housing correction is going to run its course and we shouldn't do anything to impede that."

Factory payrolls dropped by 33,000 workers after declining by 22,000 in May.

Auto manufacturing and parts industries gained 5,600 jobs, reflecting the end of a walkout at an auto parts manufacturer, the report said.

Financial firms decreased their payrolls by 10,000, after a 3,000 decline in the previous month.

Workers' average hourly wages rose by 0.3 per cent to $18.01. Hourly earnings are now 3.4 per cent higher than in June 2007, the smallest annual increase since January 2006.

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