FTSE restrained by US job loss news

LONDON'S top share index made tentative gains yesterday, but progress was held back as further poor US jobs data capped a disappointing week for global economic news.

US employers cut a worse-than-expected 125,000 jobs in June, compounding investor nerves after a flurry of worrying signs in recent days.

The Dow Jones Industrial Average fell more than 80 points in early trading and pared back gains on the FTSE 100, which eased from a rise of more than 1 per cent at one stage to close up 32.34 points at 4,838.09.

Michael Hewson, analyst at CMC Markets, said: "This week's weak global economic data has dented investor confidence amid concerns that the global recovery is shakier than previously thought."

The dollar was suffering a second difficult session amid the concern on the US economy, with the pound up to $1.52.

The euro also strengthened, reaching a six-week high against the dollar. UK markets were given a much-needed boost after a tax climbdown from the Australian government buoyed miners.

The mining sector cheered on news that the harsh super-tax proposals of deposed former prime minister Kevin Rudd would be replaced by a softer regime.

Xstrata was one the best performers, gaining 25.3p to 871.1p.

Elsewhere among commodity stocks, Edinburgh-based oil and gas firm Cairn Energy rose 20.8p to 422.1p as brokers at Canaccord lifted their target price and said the explorer's Greenland operations could transform the group.

Another stock benefiting from positive broker comment was engineering and aerospace giant Rolls-Royce, which Investec upgraded to a "buy" after praising its defensive qualities. The firm added 12p to end the day at 547p. Banks were also making modest gains as the funding fears prevalent earlier in the week eased slightly, leaving Barclays 11.6p up at 267p and Lloyds Banking Group 2.5p better at 54.7p.

Royal Bank of Scotland, which yesterday announced the sale of its Indian retail and commercial banking operations to HSBC for a 63 million premium to net asset value, was 0.6p up at 40.1p. HSBC ticked up 1p to 600.1p.

Tesco rose 5.4p to 382.9p as it faced a showdown with investors over pay plans at Sir Terry Leahy's final annual meeting before he steps down next March.

More than one-third of investors protested at the supermarket operator's remuneration report amid concerns over rising rewards for the boss of Tesco's loss-making US chain Fresh & Easy.

Among the Footsie fallers, mobile phone giant Vodafone was one of the biggest casualties, losing 1.9p to 136.5p as defensive stocks lost some appeal.

In the FTSE 250, Aberdeen-based Dana Petroleum was the biggest riser, up 22 per cent or 263p to 1,440p after a 1.5 billion takeover approach from South Korea's national oil company.

There was more takeover interest yesterday surrounding England cricket team sponsor Brit Insurance, which added 12.5p to 900p after it rejected a second proposal from private equity firm Apollo worth 824m.