US jobs shock helps lift FTSE figures

LONDON'S Footsie staged a late-session fight back yesterday after upbeat US economic data helped to calm investor concerns over high street Christmas trading and lower commodity prices.

The FTSE 100 index's New Year rally appeared to have been brought to a halt in morning trading following disappointing festive sales figures from Next and HMV.

But London's top tier clawed its way out of the red to close 29.99 points - or 0.5 per cent - higher at 6,043.86, following Tuesday's 1.9 per cent surge.

David Jones, chief market strategist at IG Index, said: "The FTSE was brought back down to earth with a bang in the morning as it dropped to 5,970 shortly after opening and oscillated between there and the 6,000-level for most of the day.

"That was before some extremely positive jobs numbers came out of the US and jolted the markets back into life in the afternoon."

Stocks on Wall Street received a boost from data on jobs and a positive service sector performance, with the dollar strengthening on the economic reports.

Sterling fell against the greenback as the US currency gained ground, with the pound down to just under $1.55.

Retail stocks were in focus in London after Next said pre-Christmas snow cost it 22 million and music chain HMV reported a 13.6 per cent drop in like-for-like sales in the UK and Ireland, prompting it to announce plans to close stores.

B&Q-owner Kingfisher and Primark parent Associated British Foods were among retailers on the back foot, down 1.8p to 265.2p and 14p to 1,150p respectively.

But it was not all gloom in the retail sector as high street bellwether John Lewis reported resilient trading, with like-for-like sales up 7.6 per cent in the five weeks to 1 January.

Next shares soon moved out of the red, closing up 88p to 2,103p as the group confirmed it remained on track to improve profits in the year to the end of January.

Marks & Spencer also bounced back from early session falls, adding 0.6p at 375p.

There was no such reprieve for HMV, which saw shares slump by more than one-fifth after the latest disappointing sales figures fuelled City speculation over the future of the chain.

With the company warning it faced a battle to meet a banking covenant test in April, shares fell 6.5p to 26p and left HMV with a market value of just over 100m.

Miners continued to weigh on the top tier as metal prices declined, with Antofagasta down 36p at 1,586p and Anglo American off 58.5p at 3,348.5p.

BP shares continued to gain after rallying 6 per cent on Tuesday following hopes over its Gulf of Mexico oil spill bill and after reports suggesting Shell had considered a takeover during BP's market turmoil. Shares were up another 6.4p at 499.3p.

Chipmaker ARM Holdings was top of the risers' board on reports it may be the subject of a takeover bid, with Intel mooted as the potential purchaser.Its shares rose 33.5p to 471.4p.

Among the Scottish stocks, Aberdeen Asset Management rose 2.6p or 1.3 per cent to 207.7p after analysts at Canaccord Genuity increased their target price from 230p tom 238p and reiterated their "buy" rating.