US jobs boost offsets Italian concerns

POSITIVE employment data from the US pushed the London market more than 1 per cent higher yesterday and countered continued fears over Italy’s sovereign debt crisis.

The FTSE 100 index staged a last-minute push to close 59.4 points ahead at 5,567 after the US Labour department said weekly unemployment claims over a four-week average declined for the fourth straight week to its lowest level since July 2008.

Italy raised about €7 billion (£5.9bn) in medium- and long-term debt. Rome sold €2.5bn of ten-year bonds at an interest rate of 6.98 per cent, which was close to the unsustainable 7 per cent mark.

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Although analysts breathed a sigh of relief that the country was able to find buyers for the bonds, fears over Italy’s ability to service its debts in the long term maintained the pressure on the euro, which continued to slide against most major currencies, including the dollar and yen.

However, the pound fell against the euro at 1.18 amid fears over the potential impact the ongoing eurozone crisis could have on London.

Sterling also fell against the US dollar at 1.53 as investors turned to the greenback as a safe haven investment and a key business activity index fell by less than forecast by City analysts. The Institute for Supply Management-Chicago said its business barometer decreased to 62.5 from 62.6, where 60 measures growth.

In London, banks were among the risers following the latest Italian debt auction, with Royal Bank of Scotland up 0.3p at 20.1p and Lloyds Banking Group 0.5p stronger at 25.5p.

Next was up 49p at 2,737p ahead of a trading update next week, but the rally seen yesterday for Marks & Spencer proved short-lived as its shares fell 0.9p to 309.5p.

In the FTSE 250 index, shares in betting exchange Betfair were 3 per cent lower after a technical glitch reportedly forced it to void all bets on a race at Leopardstown. The stock fell for a second successive session, down 21.5p at 760p.

Shares in bus maker Optare were 4 per cent lower at 0.58p after Falkirk-based Alexander Dennis said it was no longer interested in gate-crashing the firm’s existing deal to hand a 75 per cent stake to India’s Ashok Leyland.