Jobs progress gives shares a lift

Published on Friday 4 December 2009 21:28

LONDON FTSE 100 CLOSE 5,322.36 +9.36

THE London market ended the final session of the week marginally higher, supported by upbeat US jobs data, with gains from defensive drug-makers offsetting weaker miners hurt by a fall in key metals prices.

Among FTSE 100 stocks, the leading gainer was British Airways, up 5.8p or 3 per cent at 212p.

The carrier was benefiting from a broker upgrade as Citigroup changed its recommendation from "hold" to "buy", while its shares were also lifted by low-cost rival EasyJet's news of a sharp rise in bookings.

EasyJet said passenger numbers rose by 12.2 per cent to 3.35 million in November, which gave the sector a fillip. The budget airline's shares closed 9.8p higher at 390p following the update.

The Footsie closed up 9.36 points at 5,322.36, having headed as high as 5,373.94 following the robust jobs data from across the Atlantic. London's benchmark index gained 2.5 per cent during the week after declines in the previous two weeks.

US government figures revealed that a net 11,000 jobs were axed during November, far less than the 130,000 predicted and a drastic fall on the revised figures for the previous month.

Referring to the US jobs data, Mike Lenhoff, a strategist at brokerage Brewin Dolphin, said: "I can imagine things going both ways. One is that the market's just over-reacted to something that proves to be a rogue figure.

"But if it is for real, then the markets won't like what's going to come next, which is that the American central bank will have to convey to the market a slightly different message than it's been conveying up until now."

Many economists now expect the Federal Reserve to raise US interest rates in the second quarter of 2010 rather than towards the end of next year.

Banks were back in the spotlight in London as an official report revealed public sector support had soared to 850 billion since the start of the financial crisis. The National Audit Office report made for gloomy reading as it laid bare the full scale of the drag on the public purse.

Part-nationalised Lloyds Banking Group had earlier led declines as blue-chip banks gave back gains of the previous session.

They were also hit by a lukewarm broker note from JP Morgan, but the cheery US jobs news helped Lloyds see a turnaround in its fortunes, ending the day up 0.55p up at 56p.

Standard Chartered remained in the red, its shares down 4 per cent, or 57p to 1,513p.

Royal Bank of Scotland also remained in negative territory amid reports that it is expected to pay its investment bankers substantially less than rival institutions after bowing to government pressure. RBS shares were off 0.5p at 34.63p.

Primark parent Associated British Foods was on the rise, ahead 12p at 812p, after reassuring that trading results for the first two months of the new financial year were ahead of its expectations and as it voiced confidence in growing full-year profits.

However, housebuilders were out of favour in the FTSE 250 after updates from Berkeley Group and Bellway.

The pair were down despite improved trading as investors focused on their caution over the state of the property market. Berkeley fell 16p to 876p, while Bellway dropped 6p to 758p.

Defensive pharmaceutical, telecoms and tobacco stocks were in demand. AstraZeneca and GlaxoSmithKline put on 2.6 per cent to 2,843p and 2.2 per cent to 1,312p, respectively, while Vodafone climbed 1.5 per cent to 142.4p and British American Tobacco was 1.6 per cent firmer at 1,938p.

Energy stocks rose, with Cairn Energy closing 56p or 1.8 per cent stronger at 3,138p.